AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 16, 1996
REGISTRATION STATEMENT NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMERICREDIT FINANCIAL SERVICES, INC.
(SPONSOR OF THE TRUSTS DESCRIBED HEREIN)
Delaware 200 BAILEY AVENUE 75-2439888
(Jurisdiction) FORT WORTH, TEXAS 76107 (I.R.S. Employer
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) Identification No.)
CHRIS A. CHOATE, ESQ.
AMERICREDIT CORP.
200 BAILEY AVENUE
FORT WORTH, TEXAS 76107
(NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
CHRIS DIANGELO, ESQ.
DEWEY BALLANTINE
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.|_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box.|X|
If this Form is filed to register additional securites for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering.|_|
If this Form is filed as a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering.|_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
TITLE OF SECURITIES BEING REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(2)
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<S> <C> <C> <C> <C>
Auto Receivables Asset Backed Securities $1,000,000,000 100% $1,000,000,000 $303,030
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) In accordance with Rule 429 under the Securities Act of 1933, the
Prospectus included herein is a combined prospectus which also relates to
the Registrant's Registration Statement on Form S-3, File No. 98620 (the
"Prior Registration Statement"). The amount of securities eligible to be
sold under the Prior Registration Statement ($9,058,186 as of December 16,
1996) shall be carried forward to this Registration Statement. A filing fee
in the amount of $172,413.79 was paid with the Prior Registration
Statement.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
CROSS REFERENCE SHEET
TO FORM S-3
CAPTION OR LOCATION
ITEM AND CAPTION IN FORM S-3 IN PROSPECTUS
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1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus.................. Forepart of Registration
Statement; Outside Front
Cover Page**
2. Inside Front and Outside Back Cover Page
of Prospectus............................. Inside Front Cover Page**;
Outside Back Cover Page**
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges........ Summary of Prospectus**;
Special Considerations**;*
4. Use of Proceeds............................. Use of Proceeds
5. Determination of Offering Price............. *
6. Dilution.................................... *
7. Selling Security Holders.................... *
8. Plan of Distribution........................ Methods of Distribution**
9. Description of Securities to be Registered.. Outside Front Cover Page**;
Summary of Prospectus**;
Description of
the Securities**;
Certain Federal Income Tax
Consequences**
10. Interests of Named Experts and Counsel...... *
11. Material Changes............................ *
12. Incorporation of Certain Information by
Reference.................................. Inside Front Cover Page**;
Incorporation of Certain
Documents by Reference
13. Disclosure of Commission Position on
Indemnification for Securities
Act Liabilities........................... See page II-3
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* Not applicable or answer is negative.
** To be completed from time to time
by Prospectus Supplement.
<PAGE>
PROSPECTUS
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Auto Receivables Backed Securities Issuable in Series
AMERICREDIT FINANCIAL SERVICES, INC.
This Prospectus describes certain Auto Receivables Backed Notes (the
"Notes") and Auto Receivables Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities") that may be sold from time to time in
one or more series, in amounts, at prices and on terms to be determined at the
time of sale and to be set forth in a supplement to this Prospectus (each, a
"Prospectus Supplement"). Each series of Securities may include one or more
classes of Notes and one or more classes of Certificates, which will be issued
either by the Company, a Transferor (as hereinafter defined), or by a trust to
be formed by the Company for the purpose of issuing one or more series of such
Securities (each, a "Trust"). The Company, a Transferor or a Trust, as
appropriate, issuing Securities as described in this Prospectus and the related
Prospectus Supplement shall be referred to herein as the "Issuer."
Each class of Securities of any series will evidence beneficial ownership
in a segregated pool of assets (the "Trust Property") (such Securities,
"Certificates") or will represent indebtedness of the Issuer secured by the
Trust Property (such Securities, "Notes"), as described herein and in the
related Prospectus Supplement. The Trust Property may consist of any combination
of retail installment sales contracts between manufacturers, dealers or certain
other originators and retail purchasers secured by new and used automobiles and
light duty trucks financed thereby, or participation interests therein, together
with all monies received relating thereto (the "Contracts"). The Trust Property
may also include a security interest in the underlying new and used automobiles
and light duty trucks and property relating thereto, together with the proceeds
thereof (the "Vehicles" together with the Contracts, the "Receivables"). If and
to the extent specified in the related Prospectus Supplement, credit enhancement
with respect to the Trust Property or any class of Securities may include any
one or more of the following: a financial guaranty insurance policy (a "Policy")
issued by an insurer specified in the related Prospectus Supplement, a reserve
account, letters of credit, credit or liquidity facilities, third party payments
or other support, cash deposits or other arrangements. In addition to or in lieu
of the foregoing, credit enhancement may be provided by means of subordination,
cross-support among the Receivables or over-collateralization. See "Description
of the Trust Agreements -- Credit and Cash Flow Enhancement." The Receivables in
the Trust Property for a series will have been originated by the Company on or
prior to the date of issuance of the related Securities, as described herein and
in the related Prospectus Supplement. The Receivables included in a Trust Fund
will be serviced by a servicer (the "Servicer") described in the related
Prospectus Supplement.
Each series of Securities may include one or more classes (each, a
"Class"). A series may include one or more Classes of Securities entitled to
principal distributions, with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no principal distributions. The rights of one or more Classes of Securities of
any series may be senior or subordinate to the rights of one or more of the
other Classes of Securities. A series may include two or more Classes of
Securities which differ as to the timing, order or priority of payment, interest
rate or amount of distributions of principal or interest or both. Information
regarding each Class of Securities of a series, together with certain
characteristics of the related Receivables, will be set forth in the related
Prospectus Supplement. The rate of payment in respect of principal of the
Securities of any Class will depend on the priority of payment of such a Class
and the rate and timing of payments (including prepayments, defaults,
liquidations or repurchases of Receivables) on the related Receivables. A rate
of payment lower or higher than that anticipated may affect the weighted average
life of each Class of Securities in the manner described herein and in the
related Prospectus Supplement. See "Description of the Securities."
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" PAGE 13 HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
THE NOTES OF A GIVEN SERIES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT
REPRESENT OBLIGATIONS OF THE COMPANY, ANY SERVICER OR ANY OF THEIR RESPECTIVE
AFFILIATES. THE CERTIFICATES OF A GIVEN SERIES REPRESENT BENEFICIAL INTERESTS IN
THE RELATED TRUST ONLY AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE
COMPANY, ANY TRANSFEROR, ANY SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES.
NEITHER THE SECURITIES NOR THE UNDERLYING RECEIVABLES WILL BE GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY THE COMPANY, ANY
SERVICER, ANY TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS SET FORTH
IN THE RELATED PROSPECTUS SUPPLEMENT. SEE ALSO "RISK FACTORS" PAGE 13.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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Offers of the Securities may be made through one or more different
methods, including offerings through underwriters as more fully described under
"Method of Distribution" herein and in the related Prospectus Supplement. Prior
to issuance, there will have been no market for the Securities of any series,
and there can be no assurance that a secondary market for the Securities will
develop, or if it does develop, it will continue.
Retain this Prospectus for future reference. This Prospectus may not
be used to consummate sales of Securities unless accompanied by a Prospectus
Supplement.
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The date of this Prospectus is ___________, 199_.
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a series of Securities to be offered
hereunder, among other things, will set forth with respect to such series of
Securities: (i) a description of the Class or Classes of such Securities, (ii)
the rate of interest, the "Pass-Through Rate" or "Interest Rate" or other
applicable rate (or the manner of determining such rate) and authorized
denominations of such Class of such Securities; (iii) certain information
concerning the Receivables and insurance polices, cash accounts, letters of
credit, financial guaranty insurance policies, third party guarantees or other
forms of credit enhancement, if any, relating to one or more pools of
Receivables or all or part of the related Securities; (iv) the specified
interest, if any, of each Class of Securities in, and manner and priority of,
the distributions from the Trust Property; (v) information as to the nature and
extent of subordination with respect to such series of Securities, if any; (vi)
the payment date to Securityholders; (vii) information regarding the Servicer(s)
for the related Receivables; (viii) the circumstances, if any, under which the
Trust Property may be subject to early termination; (ix) information regarding
tax considerations; and (x) additional information with respect to the method of
distribution of such Securities.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at 500 West Madison, 14th Floor, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of the Registration
Statement may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and any Prospectus
Supplement with respect hereto and, if given or made, such information or
representations must not be relied upon. This Prospectus and any Prospectus
Supplement with respect hereto do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Securities offered
hereby and thereby, nor an offer of the Securities to any person in any state or
other jurisdiction in which such offer would be unlawful. The delivery of this
Prospectus at any time does not imply that information herein is correct as of
any time subsequent to its date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents subsequently filed by the Company with respect to the
Registration Statement, either on its own behalf or on behalf of a Trust,
relating to any series of Securities referred to in the accompanying Prospectus
Supplement, with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the
date of this Prospectus and prior to the termination of any offering of the
Securities issued by the Issuer, shall be deemed to be incorporated by reference
in this Prospectus and to be a part of this Prospectus from the date of the
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein (or in the accompanying Prospectus Supplement) or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or replaces such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
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REPORTS TO SECURITYHOLDERS
So long as the Securities are in book-entry form, monthly and annual
reports concerning the Securities and the Trust will be sent by the Trustee to
Cede & Co., as the nominee of DTC and as registered holder of the Securities
pursuant to the related Pooling and Servicing Agreement. DTC will supply such
reports to Securityholders in accordance with its procedures. To the extent
required by the Securities Exchange Act of 1934, as amended, the Trust will
provide financial information to the Securityholders which has been examined and
reported upon, with an opinion expressed by, an independent public accountant;
to the extent not so required, such financial information will be unaudited. The
Company has determined that the financial statements of no entity other than the
Security Insurer are material to the offering made hereby. The Trust will be
formed to own the Receivables, hold and administer the Pre-Funding Account, to
issue the Securities and to acquire the Subsequent Receivables, if available.
The Trust will have no assets or obligations prior to issuance of the Securities
and will engage in no activities other than those described herein. Accordingly,
no financial statements with respect to the Trust are included in the related
Prospectus Supplement. The audited financial statements of the Certificate
Insurer are set forth in Appendix A to the related Prospectus Supplement, and
the unaudited interim financial statements of the Certificate Insurer are set
forth in Appendix B to the related Prospectus Supplement. The Company intends to
discontinue filing periodic reports at the beginning of the company's next
fiscal year, to the extent permitted by Section 15(d) of the Exchange Act.
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SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in the summary
are defined elsewhere in the Prospectus on the pages indicated in the "Index of
Terms."
Issuer.................. With respect to each series of Securities, either the
Company, a special-purpose finance subsidiary of the
Company which may be organized and established by the
Company with respect to the Trust Property (each such
special-purpose finance subsidiary, a "Transferor")
or a trust (each, a "Trust") to be formed by the
Company. For purposes of this Prospectus, the term
"Company" includes the term "Transferor". The
Company, a Transferor or a Trust issuing Securities
pursuant to this Prospectus and the related
Prospectus Supplement shall be referred to herein as
the "Issuer" with respect to the related Securities.
See "The Issuers."
Company................. AmeriCredit Financial Services, Inc. ("AFS" or, the
"Company"), a Delaware corporation. The Receivables
will be either (i) originated by various dealers,
which may or may not be affiliated with one or more
manufacturers of vehicles ("Dealers", and together
with such manufacturers, "Vendors") or (ii) acquired
by the Company from other originators or owners of
Receivables. The Company's principal executive
offices are located at 200 Bailey Avenue, Fort Worth,
Texas 76107, and its telephone number is (817)
332-7000. See "The Company and the Servicer."
Servicer................ AmeriCredit Financial Services, Inc. ("AFS" or, in
its capacity as the servicer, the "Servicer"). See
"AmeriCredit's Automobile Financing Program -
Servicing and Collections."
Trustee................. The Trustee for each series of Securities will be
specified in the related Prospectus Supplement. In
addition, a Trust may separately enter into an
Indenture and may issue Notes pursuant to such
Indenture; in any such case the Trust and the
Indenture will be administered by separate,
independent trustees as required by the rules and
regulations under the Trust Indenture Act of 1939 and
the Investment Company Act of 1940.
The Securities ......... Each Class of Securities of any series will either
evidence beneficial ownership in a segregated pool of
assets (the "Trust Property") (such Securities,
"Certificates") or will represent indebtedness of the
Issuer secured by the Trust Property (such
Securities, "Notes"), as described herein and in the
related Prospectus Supplement. The Trust Property may
consist of any combination of retail installment
sales contracts between manufacturers, dealers or
certain other originators and retail purchasers
secured by new and used automobiles and light duty
trucks financed thereby, or participation interests
therein, together with all monies received relating
thereto (the "Contracts"). The Trust Property also
may include a security interest in the underlying new
and used automobiles and light duty trucks and
property relating thereto, together with the proceeds
thereof (the "Vehicles" and together with the
Contracts, the "Receivables").
The Trust Property will include Receivables with
respect to which the related Contract or the related
Vehicles is subject to federal or state registration
or titling requirements. No Trust Property will
include Receivables with respect to which the
underlying Contracts or Vehicles relate to office
equipment, aircraft, ships or boats, firearms or
other weapons, railroad rolling stock or facilities
such as factories, warehouses or plants subject to
state laws governing the manner in which title or
security interest in real property is determined or
perfected.
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If and to the extent specified in the related
Prospectus Supplement, credit enhancement with
respect to the Trust Property or any class of
Securities may include any one or more of the
following: a financial guaranty insurance policy (a
"Policy") issued by an insurer specified in the
related Prospectus Supplement, a reserve account,
letters of credit, credit or liquidity facilities,
third party payments or other support, cash deposits
or other arrangements. In addition to or in lieu of
the foregoing, credit enhancement may be provided by
means of subordination, cross-support among the
Receivables or over-collateralization. The Company
will originate Receivables or acquire Receivables
from one or more originators on or prior to the date
of issuance of the related Securities, as described
herein and in the related Prospectus Supplement.
With respect to Securities issued by a Trust, each
Trust will be established pursuant to an agreement
(each, a "Pooling Agreement") by and between the
Company and the Trustee named therein. Each Pooling
Agreement will describe the related pool of
Receivables held by the Trust.
With respect to Securities that represent debt issued
by the Issuer, the Issuer will enter into an
indenture (each, an "Indenture") by and between the
Issuer and the trustee named on such Indenture (the
"Indenture Trustee"). Each Indenture will describe
the related pool of Receivables comprising the Trust
Property and securing the debt issued by the related
Issuer.
The Receivables comprising the Trust Property will be
serviced by the Servicer pursuant to a servicing
agreement (each, a "Servicing Agreement") by and
between the Servicer and the related Issuer.
In the case of the Trust Property of any class of
Securities, the contractual arrangements relating to
the establishment of a Trust, if any, the servicing
of the related Receivables and the issuance of the
related Securities may be contained in a single
agreement, or in several agreements which combine
certain aspects of the Pooling Agreement, the
Servicing Agreement and the Indenture described above
(for example, a pooling and servicing agreement, or a
servicing and collateral management agreement). For
purposes of this Prospectus, the term "Trust
Agreement" as used with respect to Trust Property
means, collectively, and except as otherwise
described in the related Prospectus Supplement, any
and all agreements relating to the establishment of a
Trust, if any, the servicing of the related
Receivables and the issuance of the related
Securities. The term "Trustee" means any and all
persons acting as a trustee pursuant to a Trust
Agreement.
Securities Will Be Non-Recourse.
The Securities will not be obligations, either
recourse or non-recourse (except for certain
non-recourse debt described under "Certain Tax
Considerations"), of the Company, the related
Servicer or any person other than the related Issuer.
The Notes of a given series represent obligations of
the Issuer, and the Certificates of a given series
represent beneficial interests in the related Issuer
only and do not represent interests in or obligations
of the Company, the related Servicer or any of their
respective affiliates other than the related Issuer.
In the case of Securities that represent beneficial
ownership interest in the related Issuer, such
Securities will represent the beneficial ownership
interests in such Issuer and the sole source of
payment will be the assets of such Issuer. In the
case of Securities that represent debt issued by the
related Issuer, such Securities will be secured by
assets in the related Trust Property. Notwithstanding
the foregoing, and as to be described in the related
Prospectus Supplement, certain types of credit
enhancement, such as a letter of credit, financial
guaranty insurance policy or reserve fund may
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constitute a full recourse obligation of the issuer
of such credit enhancement.
General Nature of the Securities as Investments.
All of the Securities offered pursuant to this
Prospectus and the related Prospectus Supplement will
be rated in one of the four highest rating categories
by one or more Rating Agencies (as defined herein).
Additionally, except to the extent provided in the
related Prospectus Supplement, all of the Securities
offered pursuant to this Prospectus and the related
Prospectus Supplement will be of the fixed-income
type ("Fixed Income Securities"). Fixed Income
Securities will generally be styled as debt
instruments, having a principal balance and a
specified interest rate ("Interest Rate"). Fixed
Income Securities may either represent beneficial
ownership interests in the related Receivables held
by the related Trust or debt secured by certain
assets of the related Issuer.
Each series or Class of Fixed Income Securities
offered pursuant to this Prospectus may have a
different Interest Rate, which may be a fixed or
adjustable Interest Rate. The related Prospectus
Supplement will specify the Interest Rate for each
series or Class of Fixed Income Securities described
therein, or the initial Interest Rate and the method
for determining subsequent changes to the Interest
Rate.
A series may include one or more Classes of Fixed
Income Securities ("Strip Securities") entitled (i)
to principal distributions, with disproportionate,
nominal or no interest distributions, or (ii) to
interest distributions, with disproportionate,
nominal or no principal distributions. In addition, a
series of Securities may include two or more Classes
of Fixed Income Securities that differ as to timing,
sequential order, priority of payment, Interest Rate
or amount of distribution of principal or interest or
both, or as to which distributions of principal or
interest or both on any Class may be made upon the
occurrence of specified events, in accordance with a
schedule or formula, or on the basis of collections
from designated portions of the related pool of
Receivables. Any such series may include one or more
Classes of Fixed Income Securities ("Accrual
Securities"), as to which certain accrued interest
will not be distributed but rather will be added to
the principal balance (or nominal balance, in the
case of Accrual Securities which are also Strip
Securities) thereof on each Payment Date, as
hereinafter defined, or in the manner described in
the related Prospectus Supplement.
If so provided in the related Prospectus Supplement,
a series may include one or more other Classes of
Fixed Income Securities (collectively, the "Senior
Securities") that are senior to one or more other
Classes of Fixed Income Securities (collectively, the
"Subordinate Securities") in respect of certain
distributions of principal and interest and
allocations of losses on Receivables.
In addition, certain Classes of Senior (or
Subordinate) Securities may be senior to other
Classes of Senior (or Subordinate) Securities in
respect of such distributions or losses.
General Payment Terms of Securities.
As provided in the related Trust Agreement and as
described in the related Prospectus Supplement, the
holders of the Securities ("Securityholders") will be
entitled to receive payments on their Securities on
specified dates (each, a "Payment Date"). Payment
Dates with respect to Fixed Income Securities will
occur monthly, quarterly or semi-annually, as
described in the related Prospectus Supplement.
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The related Prospectus Supplement will describe a
date (the "Record Date") preceding such Payment Date,
as of which the Trustee or its paying agent will fix
the identity of the Securityholders for the purpose
of receiving payments on the next succeeding Payment
Date. As described in the related Prospectus
Supplement, the Payment Date will be a specified day
of each month, commonly the tenth, twelfth, fifteenth
or twenty-fifth day of each month (or, in the case of
quarterly-pay Securities, the tenth, twelfth,
fifteenth or twenty-fifth day of every third month;
and in the case of semi-annual pay Securities, the
tenth, twelfth, fifteenth or twenty-fifth day of
every sixth month) and the Record Date will be the
close of business as of the last day of the calendar
month that precedes the calendar month in which such
Payment Date occurs.
Each Trust Agreement will describe a period (each, a
"Remittance Period") preceding each Payment Date (for
example, in the case of monthly-pay Securities, the
calendar month preceding the month in which a Payment
Date occurs). As more fully described in the related
Prospectus Supplement, collections received on or
with respect to the related Receivables constituting
Trust Property during a Remittance Period will be
required to be remitted by the Servicer to the
related Trustee prior to the related Payment Date and
will be used to fund payments to Securityholders on
such Payment Date. As may be described in the related
Prospectus Supplement, the related Trust Agreement
may provide that all or a portion of the payments
collected on or with respect to the related
Receivables may be applied by the related Trustee to
the acquisition of additional Receivables during a
specified period (rather than be used to fund
payments of principal to Securityholders during such
period), with the result that the related Securities
will possess an interest-only period, also commonly
referred to as a revolving period, which will be
followed by an amortization period. Any such interest
only or revolving period may, upon the occurrence of
certain events to be described in the related
Prospectus Supplement, terminate prior to the end of
the specified period and result in the earlier than
expected amortization of the related Securities.
In addition, and as may be described in the related
Prospectus Supplement, the related Trust Agreement
may provide that all or a portion of such collected
payments may be retained by the Trustee (and held in
certain temporary investments, including Receivables)
for a specified period prior to being used to fund
payments of principal to Securityholders.
Such retention and temporary investment by the
Trustee of such collected payments may be required by
the related Trust Agreement for the purpose of (a)
slowing the amortization rate of the related
Securities relative to the installment payment
schedule of the related Receivables, or (b)
attempting to match the amortization rate of the
related Securities to an amortization schedule
established at the time such Securities are issued.
Any such feature applicable to any Securities may
terminate upon the occurrence of events to be
described in the related Prospectus Supplement,
resulting in distributions to the specified
Securityholders and an acceleration of the
amortization of such Securities.
As more fully specified in the related Prospectus
Supplement, neither the Securities nor the underlying
Receivables will be guaranteed or insured by any
governmental agency or instrumentality or the
Company, the related Servicer, any Trustee, or any of
their affiliates.
No Investment Companies Neither the Company nor any Trust will register as an
"investment company" under the Investment Company Act
of 1940, as amended (the "Investment Company Act").
The Residual Interest... With respect to each Trust, the "Residual Interest"
at any time represents the rights to the related
Trust Property in excess of the
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Securityholders' interest of all series then
outstanding that were issued by such Trust. The
Residual Interest in any Trust Property will
fluctuate as the aggregate Pool Balance (as
hereinafter defined) of such Trust Fund changes from
time to time. A portion of the Residual Interest in
any Trust may be sold separately in one or more
public or private transactions.
Master Trusts; Issuance
of Additional Series ... As may be described in the related Prospectus
Supplement, the Company may cause one or more of the
Trusts (such a Trust, a "Master Trust") to issue
additional series of Securities from time to time.
Under each Trust Agreement relating to a Master Trust
(each, a "Master Trust Agreement"), the Company may
determine the terms of any such new series. See
"Description of the Securities -- Master Trusts."
The Company may cause the related Trustee to offer
any such new series to the public or other investors,
in transactions either registered under the
Securities Act or exempt from registration
thereunder, directly or through one or more
underwriters or placement agents, in fixed-price
offerings or in negotiated transactions or otherwise.
A new series to be issued by a Master Trust which has
a series outstanding may, only be issued upon
satisfaction of the conditions described herein under
"Description of the Securities -- Master Trusts".
Securities secured by Receivables held by a Master
Trust shall be entitled to moneys received relating
to such Receivables on a pari passu basis with other
Securities issued pursuant to the other Trust
Agreements by such Master Trust.
Cross-Collateralization As described in the related Trust Agreement and the
related Prospectus Supplement, the source of payment
for Securities of each series will be the assets of
the related Trust Property only.
However, as may be described in the related
Prospectus Supplement, a series or class of
Securities may include the right to receive moneys
from a common pool of credit enhancement which may be
available for more than one series of Securities,
such as a master reserve account, master insurance
policy or a master collateral pool consisting of
similar Receivables. Notwithstanding the foregoing,
and as described in the related Prospectus
Supplement, no payment received on any Receivable
held by any Trust may be applied to the payment of
Securities issued by any other Trust (except to the
limited extent that certain collections in excess of
the amounts needed to pay the related Securities may
be deposited in a common master reserve account or an
overcollateralization account that provides credit
enhancement for more than one series of Securities
issued pursuant to the related Trust Agreement).
Trust Property.......... As specified in the related Prospectus Supplement,
the Trust Property will consist of the related
Contracts, and may include a security interest in the
related Vehicles. If and to the extent specified in
the related Prospectus Supplement, credit enhancement
with respect to Trust Property or any class of
Securities may include any one or more of the
following: a Policy issued by an insurer specified in
the related Prospectus Supplement, a reserve account,
letters of credit, credit or liquidity facilities,
repurchase obligations, third party payments or other
support, cash deposits or other arrangements. In
addition to or in lieu of the foregoing, credit
enhancement may be provided by means of
subordination, cross-support among the Receivables or
over-collateralization. See "Description of the
Trust Agreement -- Credit and Cash Flow Enhancement."
The Contracts are obligations for the purchase of the
Vehicles, or evidence borrowings used to acquire the
Vehicles. As specified in the related Prospectus
Supplement, the Contracts may consist of any
combination of Rule of 78s Contracts, Fixed Value
Contracts or Simple Interest Contracts. Generally,
"Rule of 78s Contracts" provide for fixed level
monthly payments which will
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amortize the full amount of the Contract over its
term. The Rule of 78s Contracts provide for
allocation of payments according to the "sum of
periodic balances" or "sum of monthly payments"
method (the "Rule of 78s"). Each Rule of 78s Contract
provides for the payment by the Obligor of a
specified total amount of payments, payable in
monthly installments on the related due date, which
total represents the principal amount financed and
finance charges in an amount calculated on the basis
of a stated annual percentage rate ("APR") for the
term of such Contract. The rate at which such amount
of finance charges is earned and, correspondingly,
the amount of each fixed monthly payment allocated to
reduction of the outstanding principal balance of the
related Contract are calculated in accordance with
the Rule of 78s. Under the Rule of 78s, the portion
of each payment allocable to interest is higher
during the early months of the term of a Contract and
lower during later months than that under a constant
yield method for allocating payments between interest
and principal. Notwithstanding the foregoing, as
specified in the related Prospectus Supplement, all
payments received by the related Servicer on or in
respect of the Rule of 78s Contracts may be allocated
on an actuarial or simple interest basis.
Generally, the "Fixed Value Contracts" provide for
monthly payments with a final fixed value payment
which is greater than the scheduled monthly payments.
A Fixed Value Contract provides for amortization of
the loan over a series of fixed level payment monthly
installments, but also requires a final fixed value
payment due after payment of such monthly
installments which may be satisfied by (i) payment in
full in cash of such amount, (ii) transfer of the
vehicle to the Company provided certain conditions
are satisfied or (iii) refinancing the fixed value
payment in accordance with certain conditions. With
respect to Fixed Value Contracts, as specified in the
related Prospectus Supplement, only the principal and
interest payments due prior to the final fixed value
payment and not the final fixed value payment may be
included initially in the related Trust Property.
"Simple Interest Contracts" provide for the
amortization of the amount financed under the
receivable over a series of fixed level monthly
payments. However, unlike the monthly payment under
Rule of 78s Contracts, each monthly payment consists
of an installment of interest which is calculated on
the basis of the outstanding principal balance of the
receivable multiplied by the stated APR and further
multiplied by the period elapsed (as a fraction of a
calendar year) since the preceding payment of
interest was made. As payments are received under a
Simple Interest Contract, the amount received is
applied first to interest accrued to the date of
payment and the balance is applied to reduce the
unpaid principal balance. Accordingly, if an Obligor
pays a fixed monthly installment before its scheduled
due date, the portion of the payment allocable to
interest for the period since the preceding payment
was made will be less than it would have been had the
payment been made as scheduled, and the portion of
the payment applied to reduce the unpaid principal
balance will be correspondingly greater. Conversely,
if an Obligor pays a fixed monthly installment after
its scheduled due date, the portion of the payment
allocable to interest for the period since the
preceding payment was made will be greater than it
would have been had the payment been made as
scheduled, and the portion of the payment applied to
reduce the unpaid principal balance will be
correspondingly less. In either case, the Obligor
pays a fixed monthly installment until the final
scheduled payment date, at which time the amount of
the final installment is increased or decreased as
necessary to repay the then outstanding principal
balance.
If an Obligor elects to prepay a Rule of 78s Contract
in full, it is entitled to a rebate of the portion of
the outstanding balance then due and payable
attributable to unearned finance charges. If a Simple
Interest Contract is prepaid, rather than receive a
rebate, the Obligor is required to pay interest only
to the date of prepayment. The
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amount of a rebate under a Rule of 78s Contract
calculated in accordance with the Rule of 78s will
always be less than had such rebate been calculated
on an actuarial basis and generally will be less than
the remaining scheduled payments of interest that
would be due under a Simple Interest Contract for
which all payments were made on schedule.
Distributions to Securityholders may not be affected
by Rule of 78s rebates under the Rule of 78s
Contracts because pursuant to the related Prospectus
Supplement such distributions may be determined using
the actuarial or simple interest method.
The related Prospectus Supplement will further
describe the type and characteristics of the
Contracts included in the Trust Property relating to
the Securities offered pursuant to this Prospectus
and the related Prospectus Supplement.
The Receivables comprising the Trust Property will be
originated by the Company; such Receivables will have
theretofore been either (i) originated by Vendors and
acquired by the Company or (ii) acquired by the
Company from other originators or owners of
Receivables.
The Company will either transfer Receivables to a
Trust pursuant to a Pooling Agreement or pledge the
Company's right, title and interest in and to such
Receivables to a Trustee on behalf of Securityholders
pursuant to an Indenture. The obligations of the
Company, the Servicer, the related Trustee and the
related Indenture Trustee, if any, under the related
Trust Agreement include those specified below and in
the related Prospectus Supplement.
In addition, if so specified in the related
Prospectus Supplement, the Trust Property will
include monies on deposit in a Pre-Funding Account
(the "Pre-Funding Account") to be established with
the Trustee, which will be used to acquire Additional
Receivables (as hereinafter defined) from time to
time during the "Pre-Funding Period" specified in the
related Prospectus Supplement. The Pre-Funding
Account, if any, will be reduced during the related
Pre-Funding Period by the amount thereof used to
purchase Additional Receivables. Any amount remaining
in the Pre-Funding Account at the end of the related
Pre-Funding Period will be distributed to the related
Securityholders, pro rata, on the Payment Date
immediately following the end of the Pre-Funding
Period.
If and to the extent provided in the related
Prospectus Supplement, the Company will be obligated
(subject only to the availability thereof) to either
transfer to a Trust or pledge to a Trustee on behalf
of Securityholders, additional Receivables (the
"Additional Receivables") from time to time during
any Pre-Funding Period specified in the related
Prospectus Supplement.
Registration of
Securities............... Securities may be represented by global securities
registered in the name of Cede & Co. ("Cede"), as
nominee of The Depository Trust Company ("DTC"), or
another nominee. In such case, Securityholders will
not be entitled to receive definitive securities
representing such Securityholders' interests, except
in certain circumstances described in the related
Prospectus Supplement. See "Description of the
Securities -- Book Entry Registration" herein.
Credit and Cash Flow
Enhancement ............ If and to the extent specified in the related
Prospectus Supplement, credit enhancement with
respect to Trust Property or any class of Securities
may include any one or more of the following: a
Policy issued by an insurer specified in the related
Prospectus Supplement (a "Security Insurer"), a
reserve account, letters of credit, credit or
liquidity facilities, third party payments or other
support, cash deposits or other arrangements. Any
form of credit enhancement will have certain
limitations and exclusions from coverage thereunder,
which will be described in the related Prospectus
Supplement. See "Description of the Trust Agreement
-- Credit and Cash Flow Enhancement."
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Repurchase Obligations
and the Receivables
Acquisition Agreement... As more fully described in the related Prospectus
Supplement, the Company will be obligated to acquire
from the related Trust Property any Receivable which
was transferred pursuant to a Pooling Agreement or
pledged pursuant to an Indenture if the interest of
the Securityholders therein is materially adversely
affected by a breach of any representation or
warranty made by the Company with respect to such
Receivable, which breach has not been cured. In
addition, if so specified in the related Prospectus
Supplement, the Company may from time to time
reacquire certain Receivables of the Trust Property,
subject to specified conditions set forth in the
related Trust Agreement.
Servicer's Compensation The Servicer shall be entitled to receive a fee for
servicing the Trust Property equal to a specified
percentage of the value of such Trust Property, as
set forth in the related Prospectus Supplement. See
"Description of the Trust Agreements -- Servicing
Compensation" herein and in the related Prospectus
Supplement.
Certain Legal Aspects
of the Contracts........ With respect to the transfer of the Contracts to the
related Trust pursuant to a Pooling Agreement or the
pledge of the related Issuer's right, title and
interest in and to such Contracts on behalf of
Securityholders pursuant to an Indenture, the Company
will warrant, in each case, that such transfer is
either a valid transfer and assignment of the
Contracts to the Trust or the grant of a security
interest in the Contracts. Each Prospectus Supplement
will specify what actions will be taken by which
parties as will be required to perfect either the
Issuer's or the Securityholders' security interest in
the Contracts. The Company may also warrant that, if
the transfer or pledge by it to the Trust or to the
Securityholders is deemed to be a grant to the Trust
or to the Securityholders of a security interest in
the Contracts, then the related Issuer or the
Securityholders will have a first priority perfected
security interest therein, except for certain liens
which have priority over previously perfected
security interests by operation of law, and, with
certain exceptions, in the proceeds thereof. Similar
security interest and priority representations and
warranties, as described in the related Prospectus
Supplement, may also be made by the Company with
respect to the Vehicles.
Perfection of security interests in automobiles and
light duty trucks is generally governed by the
vehicle registration or titling laws of the state in
which each vehicle is registered or titled. In most
states, a security interest in a vehicle is perfected
by notation of the secured party's lien on the
vehicle's certificate of title. Each Prospectus
Supplement will specify whether the Company, the
Servicer or the Trustee, in light of the
administrative burden and expense, will amend any
certificate of title to identify the Company or the
Trustee as the new secured party on the certificates
of title relating to the Vehicles. See "Certain Legal
Aspects of the Receivables."
Each Prospectus Supplement will specify if the
Company has filed or will be required to file UCC (as
herein defined) financing statements identifying the
Vehicles as collateral pledged in favor of the
related Trust or Trustee on behalf of the
Securityholders. In the absence of such filings any
security interest in the Vehicles will not be
perfected in favor of the related Trust or Trustee.
See "Certain Legal Aspects of the Receivables."
Optional Termination.... The Servicer, the Company, or, if specified in the
related Prospectus Supplement, certain other entities
may, at their respective options, effect early
retirement of a series of Securities under the
circumstances and in the manner set forth herein
under "Description of The Trust Agreement --
Termination" and in the related Prospectus
Supplement.
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Mandatory Termination... The Trustee, the Servicer or certain other entities
specified in the related Prospectus Supplement may be
required to effect early retirement of all or any
portion of a series of Securities by soliciting
competitive bids for the purchase of the Trust
Property or otherwise, under other circumstances and
in the manner specified in "Description of The Trust
Agreement -- Termination" and in the related
Prospectus Supplement.
Tax Considerations...... Securities of each series offered hereby will, for
federal income tax purposes, constitute either (i)
interests in a Trust treated as a grantor trust under
applicable provisions of the Code ("Grantor Trust
Securities"), (ii) debt issued by a Trust or by the
Company ("Debt Securities") or (iii) interests in a
Trust which is treated as a partnership ("Partnership
Interests").
The Prospectus Supplement for each series of
Securities will summarize, subject to the limitations
stated therein, federal income tax considerations
relevant to the purchase, ownership and disposition
of such Securities.
Investors are advised to consult their tax advisors
and to review "Certain Federal and State Income Tax
Consequences" in the related Prospectus Supplement.
ERISA Considerations.... The Prospectus Supplement for each series of
Securities will summarize, subject to the limitations
discussed therein, considerations under the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), relevant to the purchase of such
Securities by employee benefit plans and individual
retirement accounts. See "ERISA Considerations" in
the related Prospectus Supplement.
Ratings................. Each Class of Securities offered pursuant to this
Prospectus and the related Prospectus Supplement will
be rated in one of the four highest rating categories
by one or more "national statistical rating
organizations", as defined in the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and
commonly referred to as "Rating Agencies". Such
ratings will address, in the opinion of such Rating
Agencies, the likelihood that the Issuer will be able
to make timely payment of all amounts due on the
related Securities in accordance with the terms
thereof. Such ratings will neither address any
prepayment or yield considerations applicable to any
Securities nor constitute a recommendation to buy,
sell or hold any Securities.
The ratings expected to be received with respect to
any Securities will be set forth in the related
Prospectus Supplement.
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RISK FACTORS
Prospective Securityholders should consider, among other things, the
following factors in connection with the purchase of the Securities:
Limited Liquidity. There can be no assurance that a secondary market for
the Securities of any series or Class will develop or, if it does develop, that
it will provide Securityholders with liquidity of investment or that it will
continue for the life of such Securities. The Prospectus Supplement for any
series of Securities may indicate that an underwriter specified therein intends
to establish and maintain a secondary market in such Securities; however, no
underwriter will be obligated to do so. The Securities will not be listed on any
securities exchange.
Ownership of Contracts. In connection with the issuance of any series of
Securities, the Company will originate Contracts. The Company will warrant in a
Trust Agreement (i) if the Company retains title to the Contracts, that the
Trustee for the benefit of Securityholders has a valid security interest in such
Contracts, or (ii) if the Company transfers such Contracts to a Trust, that the
transfer of the Contracts to such Trust is either a valid assignment, transfer
and conveyance of the Contracts to the Trust or the Trustee on behalf of the
Securityholders has a valid security interest in such Contracts. As to be
described in the related Prospectus Supplement, the related Trust Agreement will
provide either that the Trustee will be required to maintain possession of the
original copies of all Contracts that constitute chattel paper or that the
Company or the Servicer will retain possession of such Contracts; provided that
in case the Company retains possession of the related Contracts, the Servicer
may take possession of such original copies as necessary for the enforcement of
any Contract. If any Contracts remain in the possession of the Company, the
related Prospectus Supplement may describe specific trigger events that will
require delivery to the Trustee. If the Company, the Servicer, the Trustee or
other third party, while in possession of the Contracts, sells or pledges and
delivers such Contracts to another party, in violation of the Receivables
Acquisition Agreement or the Trust Agreement, there is a risk that such other
party could acquire an interest in such Contracts having a priority over the
Issuer's interest. Furthermore, if the Company, the Servicer or a third party,
while in possession of the Contracts, is rendered insolvent, such event of
insolvency may result in competing claims to ownership or security interests in
the Contracts. Such an attempt, even if unsuccessful, could result in delays in
payments on the Securities. If successful, such attempt could result in losses
to the Securityholders or an acceleration of the repayment of the Securities.
The Company will be obligated to repurchase any Contract originated by the
Company and currently in the related Trust Property if there is a breach of the
Company's representations and warranties that materially and adversely affects
the interests of the Trust in such Contract and such breach has not been cured.
Security Interests. The transfer of the Receivables by the Company to the
Trustee pursuant to the related Pooling Agreement, Indenture or Trust Agreement,
the perfection of the security interests in the Receivables and the enforcement
of rights to realize on the Vehicles as collateral for the Receivables are
subject to a number of federal and state laws, including the UCC as in effect in
various states. As specified in each Prospectus Supplement, the Servicer will
take such action as is required to perfect the rights of the Trustee in the
Receivables. If, through inadvertence or otherwise, a third party were to
purchase (including the taking of a security interest in) a Receivable for new
value in the ordinary course of its business, without actual knowledge of the
Trust's interest, and take possession of a Receivable, the purchaser would
acquire an interest in such Receivable superior to the interest of the Trust. As
further specified in each Prospectus Supplement, no action will be taken to
perfect the rights of the Trustee in proceeds of a VSI Insurance Policy (as
hereinafter defined) or of any other insurance policies covering individual
Vehicles or Obligors. Therefore, the rights of a third party with an interest in
such proceeds could prevail against the rights of the Trust prior to the time
such proceeds are deposited by the Servicer into a Trust Account (as hereinafter
defined). See "Certain Legal Aspects of the Receivables".
Except to the extent specified in the related Prospectus Supplement, each
Contract will include a perfected security interest in the related Vehicle in
favor of the Trustee or the Company (and, if perfected in the name of the
Company, assigned pursuant to the related Pooling Agreement, Indenture or Trust
Agreement to the Trustee for the benefit of the Securityholders). However, to
the extent provided in the
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related Prospectus Supplement, due to the administrative burden and expense, the
certificates of title of the Vehicles securing certain Contracts which reflect
the security interest of the Company in such Vehicles may not be endorsed to
reflect the Trustee's interest therein or delivered to the Trustee. In the
absence of such endorsement and delivery, the Trustee may not have a perfected
security interest in such Vehicles. As a result, a third party buyer of a
Vehicle for value from an Obligor may extinguish the interest of the Trust in
the Vehicle, a subsequent perfected lienholder may obtain a security interest
senior in right to that of the Trust, and a trustee in bankruptcy of the Company
may be able to assert successfully that the Trust did not have a security
interest in the Vehicle. In addition, statutory liens for repairs or unpaid
taxes and other liens arising by operation of law may have priority even over
prior perfected security interests in the name of the Trustee in the Vehicles.
Restrictions on Recoveries. Unless specific limitations are described on
the related Prospectus Supplement with respect to specific Contracts, all
Contracts will provide that the obligations of the Obligors thereunder are
absolute and unconditional, regardless of any defense, set-off or abatement
which the Obligor may have against the Company or any other person or entity
whatsoever. The Company will warrant that no claims or defenses have been
asserted or threatened with respect to the Contracts and that all requirements
of applicable law with respect to the Contracts have been satisfied.
In the event that the Company or the Trustee must rely on repossession and
disposition of Vehicles to recover scheduled payments due on Defaulted Contracts
(as defined in the related Pooling Agreement), the Issuer may not realize the
full amount due on a Contract (or may not realize the full amount on a timely
basis). Other factors that may affect the ability of the Issuer to realize the
full amount due on a Contract include whether amendments to certificates of
title relating to the Vehicles had been filed, whether financing statements to
perfect the security interest in the Vehicles had been filed, depreciation,
obsolescence, damage or loss of any Vehicle, and the application of Federal and
state bankruptcy and insolvency laws. As a result, the Securityholders may be
subject to delays in receiving payments and suffer loss of their investment in
the Securities.
Insolvency and Bankruptcy Matters. The Company will take steps in
structuring the transactions contemplated hereby that are intended to ensure
that the voluntary or involuntary application for relief by the Company under
the United States Bankruptcy Code or similar applicable state laws ("Insolvency
Laws") will not result in the Trust Property becoming property of the estate of
the Company within the meaning of such Insolvency Laws. Such steps will
generally involve the creation by the Company of one or more separate,
limited-purpose subsidiaries (each, a "Finance Subsidiary") pursuant to articles
of incorporation containing certain limitations (including restrictions on the
nature of such Finance Subsidiary's business and a restriction on such Finance
Subsidiary's ability to commence a voluntary case or proceeding under any
Insolvency Law without the prior unanimous affirmative vote of all its
directors). However, there can be no assurance that the activities of any
Finance Subsidiary would not result in a court's concluding that the assets and
liabilities of such Finance Subsidiary should be consolidated with those of the
Company in a proceeding under any Insolvency Law.
With respect to the Trust Property, the Trustee and all Securityholders
will covenant that they will not at any time institute against the Company or
the related Finance Subsidiary any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
While an originator is the Servicer, cash collections held by such
originator may, subject to certain conditions, be commingled and used for the
benefit of such originator prior to each Payment Date and, in the event of the
bankruptcy of such originator, the Company, a Trust or Trustee may not have a
perfected interest in such collections.
The Company believes that the transfer of the Receivables by the Company
to a Finance Subsidiary should be treated as a valid assignment, transfer and
conveyance of such Receivables. However, in the event of an insolvency of the
Company, a court, among other remedies, could attempt to recharacterize the
transfer of the Receivables by the Company to the Finance Subsidiary as a
borrowing by the Company from the Finance Subsidiary or the related
Securityholders, secured by a pledge of such Receivables. Such an attempt, even
if unsuccessful, could result in delays in payments on the Securities.
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If such an attempt were successful, a court, among other remedies, could elect
to accelerate payment of the Securities and liquidate the Receivables, with the
Securityholders entitled to the then outstanding principal amount thereof and
interest thereon at the applicable Security Interest Rate to the date of
payment. Thus, the Securityholders could lose the right to future payments of
interest and might incur reinvestment losses. As more fully described in the
related Prospectus Supplement, in the event the related Issuer is rendered
insolvent, the related Trustee for a Trust, in accordance with the Trust
Agreement, will promptly sell, dispose of or otherwise liquidate the related
Receivables in a commercially reasonable manner on commercially reasonable
terms. The proceeds from any such sale, disposition or liquidation of such
Receivables will be treated as collections on such Receivables. If the proceeds
from the liquidation of the Receivables and any amount available from any credit
enhancement, if any, are not sufficient to pay Securities of the related series
in full, the amount of principal returned to such Securityholders will be
reduced and such Securityholders will incur a loss.
Obligors of the Vehicles may be entitled to assert against the Company,
the Issuer, or the Trust, if any, claims and defenses which they have against
the Company with respect to the Receivables. The Company will warrant that no
such claims or defenses have been asserted or threatened with respect to the
Receivables and that all requirements of applicable law with respect to the
Receivables have been satisfied.
Insurance on Vehicles. Each Receivable generally requires the Company to
maintain insurance covering physical damage to the Vehicle in an amount not less
than the unpaid principal balance of such Receivable pursuant to which the
Company is named as a loss payee. Since the Obligors select their own insurers
to provide the requisite coverage, the specific terms and conditions of their
policies vary.
In addition, although each Receivable generally gives the Company the
right to force place insurance coverage in the event the required physical
damage insurance on a Vehicle is not maintained by an Obligor, neither the
Company nor the Servicer is obligated to place such coverage. In the event
insurance coverage is not maintained by Obligors and coverage is not force
placed, then insurance recoveries may be limited in the event of losses or
casualties to Vehicles included in the Trust Property, as a result of which
Securityholders could suffer a loss on their investment.
Delinquencies. There can be no assurance that the historical levels of
delinquencies and losses experienced by the Company on its respective loan and
vehicle portfolio will be indicative of the performance of the Contracts
included in the Trust or that such levels will continue in the future.
Delinquencies and losses could increase significantly for various reasons,
including changes in the federal income tax laws, changes in the local, regional
or national economies or due to other events.
Subordination; Limited Assets. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on one Class of
Securities of a series may be subordinated in priority of payment to interest
and principal due on other Classes of Securities of a related series. Moreover,
the Trust Property will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the related Receivables and,
to the extent provided in the related Prospectus Supplement, the related reserve
account and any other credit enhancement. The Securities represent obligations
solely of the related Trust or debt secured by the related Trust Property, and
will not represent a recourse obligation to other assets of the Company. No
Securities of any series will be insured or guaranteed by the Company, the
Servicer, or the applicable Trustee. Consequently, holders of the Securities of
any series must rely for repayment primarily upon payments on the Receivables
and, if and to the extent available, the reserve account, if any, and any other
credit enhancement, all as specified in the related Prospectus Supplement.
Master Trusts. As may be described in the related Prospectus Supplement, a
Master Trust may issue from time to time more than one series. While the terms
of any additional series will be specified in a supplement to the related Master
Trust Agreement, the provisions of such supplement and, therefore, the terms of
any additional series, will not be subject to prior review by, or consent of,
holders of the Securities of any series previously issued by such Master Trust.
Such terms may include methods for determining applicable investor percentages
and allocating collections, provisions creating different or
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additional security or credit enhancements and any other provisions which are
made applicable only to such series. The obligation of the related Trustee to
issue any new series is subject to the condition, among others, that such
issuance will not result in any Rating Agency reducing or withdrawing its rating
of the Securities of any outstanding series (any such reduction or withdrawal is
referred to herein as a "Ratings Effect"). There can be no assurance, however,
that the terms of any series might not have an impact on the timing or amount of
payments received by a Securityholder of another series issued by the same
Master Trust. See "Description of the Securities -- Master Trusts."
Book-Entry Registration. Issuance of the Securities in book-entry form may
reduce the liquidity of such Securities in the secondary trading market since
investors may be unwilling to purchase Securities for which they cannot obtain
definitive physical securities representing such Securityholders' interests,
except in certain circumstances described in the related Prospectus Supplement.
Since transactions in Securities will, in most cases, be able to be
effected only through DTC, direct or indirect participants in DTC's book-entry
system ("Direct Participants" or "Indirect Participants") or certain banks, the
ability of a Securityholder to pledge a Security to persons or entities that do
not participate in the DTC system, or otherwise to take actions in respect to
such Securities, may be limited due to lack of a physical security representing
the Securities.
Securityholders may experience some delay in their receipt of
distributions of interest on and principal of the Securities since distributions
may be required to be forwarded by the Trustee to DTC and, in such case, DTC
will be required to credit such distributions to the accounts of its
Participants which thereafter will be required to credit them to the accounts of
the applicable class of Securityholders either directly or indirectly through
Indirect Participants. See "Description of the Securities -- Book Entry
Registration."
Security Rating. The rating of Securities credit enhanced by a letter of
credit, financial guaranty insurance policy, reserve fund, credit or liquidity
facilities, cash deposits or other forms of credit enhancement (collectively
"Credit Enhancement") will depend primarily on the creditworthiness of the
issuer of such external Credit Enhancement device (a "Credit Enhancer"). Any
reduction in the rating assigned to the claims-paying ability of the related
Credit Enhancer to honor its obligations pursuant to any such Credit Enhancement
below the rating initially given to the Securities would likely result in a
reduction in the rating of the Securities.
Maturity and Prepayment Considerations. Because the rate of payment of
principal on the Securities will depend, among other things, on the rate of
payment on the related Contracts, the rate of payment of principal on the
Securities cannot be predicted. Payments on the Contracts will include scheduled
payments as well as partial and full prepayments (to the extent not replaced
with substitute Contracts), payments upon the liquidation of Defaulted
Contracts, payments upon acquisitions by the Servicer or the Company of
Contracts from the related Trust Property on account of a breach of certain
representations and warranties in the related Trust Agreement, payments upon an
optional acquisition by the Servicer or the Company of Contracts from the
related Trust Property (any such voluntary or involuntary prepayment or other
early payment of a Contract, a "Prepayment"), and residual payments. The rate of
early terminations of Contracts due to Prepayments and defaults may be
influenced by a variety of economic and other factors, including, among others,
obsolescence, then current economic conditions and tax considerations. The risk
of reinvesting distributions of the principal of the Securities will be borne by
the Securityholders. The yield to maturity on Strip Securities or Securities
purchased at premiums or discounts to par will be extremely sensitive to the
rate of Prepayments on the related Receivables. In addition, the yield to
maturity on certain other types of classes of Securities, including Strip
Securities, Accrual Securities or certain other Classes in a series including
more than one Class of Securities, may be relatively more sensitive to the rate
of prepayment of the related Contracts than other Classes of Securities.
The rate of Prepayments of Contracts cannot be predicted and is influenced
by a wide variety of economic, social, and other factors, including prevailing
interest rates, the availability of alternate financing
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and local and regional economic conditions. Therefore, no assurance can be given
as to the level of Prepayments that a Trust will experience.
Securityholders should consider, in the case of Securities purchased at a
discount, the risk that a slower than anticipated rate of Prepayments on the
Receivables could result in an actual yield that is less than the anticipated
yield and, in the case of any Securities purchased at a premium, the risk that a
faster than anticipated rate of Prepayments on the Receivables could result in
an actual yield that is less than the anticipated yield.
Limitations on Interest Payments and Foreclosures. Generally, under the
terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the
"Relief Act"), or similar state legislation, an Obligor who enters military
service after the origination of the related Receivable (including an Obligor
who is a member of the National Guard or is in reserve status at the time of the
origination of the Receivable and is later called to active duty) may not be
charged interest (including fees and charges) above an annual rate of 6% during
the period of such Obligor's active duty status, unless a court orders otherwise
upon application of the lender. It is possible that such action could have an
effect, for an indeterminate period of time, on the ability of the Servicer to
collect full amounts of interest on certain of the Receivables. In addition, the
Relief Act imposes limitations that would impair the ability of the Servicer to
foreclose on an affected Receivable during the Obligor's period of active duty
status. Thus, in the event that such a Receivable goes into default, there may
be delays and losses occasioned by the inability of the Servicer to realize upon
the Financed Vehicle in a timely fashion.
Financial Condition of AFS. The Company is generally not obligated to make
any payments in respect of the Securities or the Receivables of a specific
Trust. If the Company were to cease acting as Servicer, delays in processing
payments on the Receivables and information in respect thereof could occur and
result in delays in payments to the Securityholders.
In certain circumstances, the Company will be required to acquire
Receivables from the related Trust Property with respect to which such
representations and warranties have been breached. In the event that the Company
is incapable of complying with its reacquire obligations and no other party is
obligated to perform or satisfy such obligations, Securityholders may be subject
to delays in receiving payments and suffer loss of their investment in the
Securities.
The related Prospectus Supplement will set forth certain information
regarding the Company. In addition, the Company is subject to the information
requirements of the Exchange Act and, in accordance therewith, file reports and
other information with the Commission. For further information regarding the
Company reference is made to such reports and other information which are
available as described under "Available Information."
THE TRUST PROPERTY
The Trust Property will include, as specified in the related Prospectus
Supplement, (i) a pool of Receivables, (ii) all moneys (including accrued
interest) due thereunder on or after the applicable Cut-off Date, (iii) such
amounts as from time to time may be held in one or more accounts established and
maintained by the Servicer pursuant to the related Trust Agreement, as described
below and in the related Prospectus Supplement, (iv) the security interests, if
any, in the Vehicles relating to such pool of Receivables, (v) the right to
proceeds from claims on physical damage policies, if any, covering such Vehicles
or the related Obligors, as the case may be, (vi) the proceeds of any
repossessed Vehicles related to such pool of Receivables, (vii) the rights of
the Company under the related Receivables Acquisition Agreement and (viii)
interest earned on certain short-term investments held in such Trust Property,
unless the related Prospectus Supplement specifies that such earnings may be
paid to the Servicer or the Company. The Trust Property will also include, if so
specified in the related Prospectus Supplement, monies on deposit in a
Pre-Funding Account, which will be used by the Trustee to acquire or receive a
security interest in Additional Receivables from time to time during the
Pre-Funding Period specified in the related Prospectus Supplement. See
"Desciption of the Securities -- Forward Commitments; Pre-Funding." In addition,
to the extent specified in the related Prospectus Supplement,
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some combination of Credit Enhancements may be issued to or held by the Trustee
on behalf of the related Trust for the benefit of the holders of one ore more
classes of Securities.
The Receivables comprising the Trust Property will, as specifically
described in the related Prospectus Supplement, be either (i) originated by the
Company, (ii) originated by various manufacturers and acquired by the Company,
(iii) originated by various Dealers and acquired by the Company or (iv) acquired
by the Company from originators or owners of Receivables.
The Trust Property will include Receivables with respect to which the
related Contract or the related Vehicles is subject to federal or state
registration or titling requirements. No Trust Property will include Receivables
with respect to which the underlying Contracts or Vehicles relate to office
equipment, aircraft, ships or boats, firearms or other weapons, railroad rolling
stock or facilities such as factories, warehouses or plants subject to state
laws governing the manner in which title or security interest in real property
is determined or perfected.
The Receivables included in the Trust Property will be selected from those
Receivables held by the Company based on the criteria specified in the
applicable Trust Agreement and described herein or in the related Prospectus
Supplement.
With respect to each series of Securities, on or prior to the Closing Date
on which the Securities are delivered to Securityholders, the Company or a
Finance Subsidiary will form a Trust by either (i) transferring the related
Receivables into a Trust pursuant to a Trust Agreement between the Company or a
Finance Subsidiary and the Trustee or (ii) entering into an Indenture with an
Indenture Trustee, relating to the issuance of such Securities, secured by the
related Receivables.
The Receivables comprising the Trust Property will generally have been
originated by the Company or acquired by the Company from Dealers in accordance
with the Company's specified underwriting criteria. The underwriting criteria
applicable to the Receivables included in any Trust Property will be described
in all material respects in the related Prospectus Supplement.
THE ISSUERS
With respect to each series of Securities, the Company will either
establish a separate Trust that will issue such Securities, or the Company will
form a Finance Subsidiary that will issue such Securities, in each case pursuant
to the related Trust Agreement. For purposes of this Prospectus and the related
Prospectus Supplement, the Finance Subsidiary, if the Finance Subsidiary issues
the related Securities, or the related Trust, if a Trust issues the related
Securities, shall be referred to as the "Issuer" with respect to such
Securities.
Upon the issuance of the Securities of a given series, the proceeds from
such issuance will be used by the Company to originate Receivables. The Servicer
will service the related Receivables pursuant to the applicable Servicing
Agreement, and will be compensated for acting as the Servicer. To facilitate
servicing and to minimize administrative burden and expense, the Servicer may be
appointed custodian for the related Receivables by each Trustee and the Company,
as may be set forth in the related Prospectus Supplement.
If the protection provided to the Securityholders of a given class by the
subordination of another Class of Securities of such series and by the
availability of the funds in the reserve account, if any, or any other Credit
Enhancement for such series is insufficient, the Issuer must rely solely on the
payments from the Obligors on the related Contracts, and the proceeds from the
sale of Vehicles which secure the Defaulted Contracts. In such event, certain
factors may affect such Issuer's ability to realize on the collateral securing
such Contracts, and thus may reduce the proceeds to be distributed to the
Securityholders of such series.
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THE RECEIVABLES
Receivables Pools
Information with respect to the Receivables in the related Trust Property
will be set forth in the related Prospectus Supplement, including, to the extent
appropriate, the composition of such Receivables and the distribution of such
Receivables by geographic concentration, payment frequency and current principal
balance as of the applicable Cut-off Date.
The Contracts
As specified in the related Prospectus Supplement, the Contracts may
consist of any combination of Rule of 78s Contracts, Fixed Value Contracts or
Simple Interest Contracts. Generally, "Rule of 78s Contracts" provide for fixed
level monthly payments which will amortize the full amount of the Contract over
its term. The Rule of 78s Contracts provide for allocation of payments according
to the "sum of periodic balances" or "sum of monthly payments" method (the "Rule
of 78s"). Each Rule of 78s Contract provides for the payment by the Obligor of a
specified total amount of payments, payable in monthly installments on the
related due date, which total represents the principal amount financed and
finance charges in an amount calculated on the basis of a stated annual
percentage rate ("APR") for the term of such Contract. The rate at which such
amount of finance charges is earned and, correspondingly, the amount of each
fixed monthly payment allocated to reduction of the outstanding principal
balance of the related Contract are calculated in accordance with the Rule of
78s. Under the Rule of 78s, the portion of each payment allocable to interest is
higher during the early months of the term of a Contract and lower during later
months than that under a constant yield method for allocating payments between
interest and principal. Notwithstanding the foregoing, as specified in the
related Prospectus Supplement, all payments received by the Servicer on or in
respect of the Rule of 78s Contracts may be allocated on an actuarial or simple
interest basis.
Generally, the "Fixed Value Contracts" provide for monthly payments with a
final fixed value payment which is greater than the scheduled monthly payments.
A Fixed Value Contract provides for amortization of the loan over a series of
fixed level payment monthly installments, but also requires a final fixed value
payment due after payment of such monthly installments which may be satisfied by
(i) payment in full in cash of such amount, (ii) transfer of the vehicle to the
Company, provided certain conditions are satisfied or (iii) refinancing the
fixed value payment in accordance with certain conditions. With respect to Fixed
Value Contracts, as specified in the related Prospectus Supplement, only the
principal and interest payments due prior to the final fixed value payment and
not the final fixed value payment may be included initially in the related Trust
Property.
"Simple Interest Contracts" provide for the amortization of the amount
financed under the receivable over a series of fixed level monthly payments.
However, unlike the monthly payment under Rule of 78s Contracts, each monthly
payment consists of an installment of interest which is calculated on the basis
of the outstanding principal balance of the receivable multiplied by the stated
APR and further multiplied by the period elapsed (as a fraction of a calendar
year) since the preceding payment of interest was made. As payments are received
under a Simple Interest Contract, the amount received is applied first to
interest accrued to the date of payment and the balance is applied to reduce the
unpaid principal balance. Accordingly, if an Obligor pays a fixed monthly
installment before its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be less
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an Obligor pays a fixed monthly
installment after its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be greater
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly less. In either case, the Obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the amount of
the final installment is increased or decreased as necessary to repay the then
outstanding principal balance.
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If an Obligor elects to prepay a Rule of 78s Contract in full, it is
entitled to a rebate of the portion of the outstanding balance then due and
payable attributable to unearned finance charges. If a Simple Interest Contract
is prepaid, rather than receive a rebate, the Obligor is required to pay
interest only to the date of prepayment. The amount of a rebate under a Rule of
78s Contract calculated in accordance with the Rule of 78s will always be less
than had such rebate been calculated on an actuarial basis and generally will be
less than the remaining scheduled payments of interest that would be due under a
Simple Interest Contract for which all payments were made on schedule.
Distributions to Security holders may not be affected by Rule of 78s rebates
under the Rule of 78s Contract because pursuant to the related Prospectus
Supplement such distributions may be determined using the actuarial or simple
interest method.
Delinquencies, Repossessions, and Net Losses
Certain information relating to the Company's delinquency, repossession
and net loss experience with respect to Contracts it has originated or acquired
will be set forth in each Prospectus Supplement. This information may include,
among other things, the experience with respect to all Contracts in the
Company's portfolio during certain specified periods. There can be no assurance
that the delinquency, repossession and net loss experience on any Trust Property
will be comparable to the Company's prior experience.
Maturity and Prepayment Considerations
As more fully described in the related Prospectus Supplement, if a
Contract permits a Prepayment, such payment, together with accelerated payments
resulting from defaults, will shorten the weighted average life of the related
pool of Receivables and the weighted average life of the related Securities. The
rate of Prepayments on the Receivables may be influenced by a variety of
economic, financial and other factors. In addition, under certain circumstances,
the Company will be obligated to acquire Receivables from the related Trust
Property pursuant to the applicable Trust Agreement or Receivables Acquisition
Agreement as a result of breaches of representations and warranties. Any
reinvestment risks resulting from a faster or slower amortization of the related
Securities which results from Prepayments will be borne entirely by the related
Securityholders.
The related Prospectus Supplement will set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to a particular pool of Receivables and the related series of
Securities, together with a description of any applicable prepayment penalties.
AMERICREDIT'S AUTOMOBILE FINANCING PROGRAM
General
Through its branch offices and marketing representatives, AFS serves as a
funding source for franchised and independent automobile dealers to finance
their customers' purchase of new and used automobiles and light duty trucks.
Retail installment sale contracts ("Contracts") originated by Dealers which
conform to AFS's credit policies are purchased by AFS generally without recourse
to Dealers. AFS also services the Contracts that it purchases.
AFS's indirect lending programs are designed to serve consumers who have
limited access to traditional auto financing. The typical borrower may have had
previous financial difficulties, but is now attempting to re-establish credit,
or may not yet have sufficient credit history. Because AFS serves consumers who
are unable to meet the credit standards imposed by most traditional auto
financing sources, AFS generally charges interest at rates which are higher than
those charged by traditional auto financing sources. AFS also expects to sustain
a higher level of delinquencies and credit losses than that experienced by
traditional auto financing sources since AFS provides financing in a relatively
high risk market.
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AFS has established relationships with a variety of Dealers located in the
markets in which AFS has branch offices or marketing representatives. While AFS
occasionally finances purchases of new autos, substantially all of AFS's
Contracts were originated in connection with Obligor's purchases of used autos.
Contracts are generally purchased by AFS without recourse to the Dealer,
and accordingly, the Dealer usually has no liability to AFS if the consumer
defaults on the Contract. To mitigate AFS's risk from potential credit losses,
AFS charges the Dealers an acquisition fee when purchasing Contracts. Such
acquisition fees are negotiated with Dealers on a contract-by-contract basis and
are usually non-refundable. Although Contracts are purchased without recourse to
Dealers, Dealers typically make certain representations as to the validity of
the contract and compliance with certain laws, and indemnify AFS against any
claims, defenses and set-offs that may be asserted against AFS because of
assignment of the Contract.
Contract Acquisition
AFS purchases individual Contracts through its branch offices and through
its central purchasing office, which underwrites applications solicited by
certain marketing representatives. The central purchasing office operates in a
manner similar to the branch office network.
All credit extensions are executed at the branch level. Each branch
manager has a specific credit authority based upon their experience and
historical loan portfolio results and credit scoring parameters. Extensions of
credit outside these limits are reviewed and approved by a regional vice
president. Although the credit approval process is decentralized, all credit
decisions are guided by AFS's credit scoring strategies and overall credit and
underwriting policies and procedures.
The Company has implemented a credit scoring system across its branch
network to support the branch level credit approval process. The credit scoring
system was developed by Fair Isaac & Co., Inc. from the Company's loan
origination and portfolio databases. Credit scoring is used to prioritize
applications for processing and to tailor pricing and structure to an empirical
assessment of credit risk.
Loan application packages completed by prospective Obligors are received
via facsimile at the branch offices from Dealers. Application data is entered
into AFS's automated application processing system. A credit bureau report is
automatically generated and a credit score is computed. Depending on the credit
quality of the applicant, a customer service representative may then investigate
the residence, employment and credit history of the applicant or forward the
application directly to the branch manager. In either case, the Company's credit
policy requires that all applications be investigated prior to loan funding. The
branch manager reviews the application package and determines whether to approve
the application, approve the application subject to conditions that must be met,
or to deny the application. The branch manager considers many factors in
arriving at a credit decision, including the applicant's credit score, capacity
to pay, stability, character and intent to pay and the contract terms and
collateral value. In certain cases, a regional vice president may review and
approve the branch manager's credit decision. AFS estimates that approximately
50% of applicants are denied credit by AFS typically because of their credit
histories or because their income levels are not sufficient to support the
proposed level of monthly auto payments. Dealers are contacted regarding credit
decisions by facsimile and/or telephone. Declined applicants are also provided
with appropriate notification of the decision.
Completed loan packages are received from Dealers at the branch office.
Loan terms are reverified with the Obligor by branch personnel and the loan
packages are forwarded to the centralized loan services department where the
package is scanned to create an electronic copy. Key original documents are
stored in a fire-proof vault and the loan packages are further processed in an
electronic environment. The loans are reviewed for proper documentation and
regulatory compliance and are entered into the loan accounting system. A daily
report is generated for final review by consumer finance operations management.
Once cleared for funding by consumer finance operations management, the
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loan services department issues a funding check to the Dealer. Upon funding of
the Contract, AFS acquires a perfected security interest in the Vehicle.
AFS requires all consumers to obtain or provide evidence that they carry
current comprehensive and collision insurance. Through a third party
administrator, AFS tracks the insurance status of each Contract and sends
notices to Obligors when collateral becomes uninsured. If no action is taken by
the Obligor to insure the collateral, continuing efforts are made to persuade
the Obligor to comply with the insurance requirements of the Contract. Although
it has the right, AFS rarely repossesses a Vehicle due to its being uninsured.
AFS also does not typically force place insurance coverage and add the premium
to the Obligor's obligations, although it has the right to do so under the terms
of the Contracts.
Servicing and Collections
AFS's servicing activities consist of collecting and processing Obligor
payments, responding to Obligor inquiries, initiating contact with Obligors who
are delinquent in payment of a Receivable installment, maintaining the security
interest in the Vehicle, and repossessing and liquidating collateral when
necessary. AFS utilizes various automated systems to support its servicing and
collections activities.
Approximately 15 days before an Obligor's first payment due date and each
month thereafter, AFS mails the Obligor a billing statement directing them to
mail payments to a lockbox banking facility for deposit in a lockbox account.
Payment receipt data is electronically transferred to AFS by a lockbox banking
facility for posting to AFS records. All subsequent payment processing and
customer account maintenance is performed centrally by AFS's loan services
department.
Collection activity on Contracts is performed by collection personnel
("Collectors") at AFS's headquarters facility. The Collectors follow
standardized collection policies and procedures. Collectors monitor the
Receivables portfolio through a computer assisted collection system and usually
take action on delinquencies within a few days after delinquency occurs.
A Collector's action is typically telephone contact with the Obligor
utilizing AFS's automated predictive dialing system. This system dials multiple
telephone numbers simultaneously based upon parameters set by management. When a
telephone connection is made, the call is routed to a collector and the
delinquent Obligor's account information is displayed on a Collector's computer
terminal. The Collector then attempts to work out the delinquency with the
Obligor.
If an Obligor continues to be delinquent, AFS's policy is to work out
suitable payment arrangements with the Obligor. However, if the Obligor becomes
seriously delinquent or deals in bad faith with AFS, AFS may ultimately have to
repossess the Vehicle and generally will take prompt action to do so.
Repossessions are handled by independent repossession firms engaged by AFS. All
repossessions are approved by collection officers.
AFS follows prescribed legal procedures for repossessions, which include
peaceful repossession, one or more notifications to Obligors, a prescribed
waiting period prior to disposition of the Vehicle, and return of personal items
to the Obligor.
Upon repossession and after any prescribed waiting period, the Vehicle is
typically sold at auction. AFS will pursue collection of deficiencies when it
deems such action to be appropriate.
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POOL FACTORS
The "Pool Factor" for each Class of Securities will be a seven-digit
decimal, which the Servicer will compute prior to each distribution with respect
to such Class of Securities, indicating the remaining outstanding principal
balance of such Class of Securities as of the applicable Payment Date, as a
fraction of the initial outstanding principal balance of such Class of
Securities. Each Pool Factor will be initially 1.0000000, and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable Class of Securities. A Securityholder's portion of the aggregate
outstanding principal balance of the related Class of Securities is the product
of (i) the original aggregate purchase price of such Securityholder's Securities
and (ii) the applicable Pool Factor.
As more specifically described in the related Prospectus Supplement with
respect to each series of Securities, the related Securityholders of record will
receive reports on or about each Payment Date concerning the payments received
on the Receivables, the Pool Balance (as such term is defined in the related
Prospectus Supplement, the "Pool Balance"), each Pool Factor and various other
items of information. In addition, Securityholders of record during any calendar
year will be furnished information for tax reporting purposes not later than the
latest date permitted by law.
USE OF PROCEEDS
Except as provided in the related Prospectus Supplement, the proceeds from
the sale of the Securities of a given series will be used by the Company for the
acquisition of the related Receivables, for general corporate purposes,
including, but not limited to, the purchase of additional Receivables from
Dealers, repayment of indebtedness and general working capital purposes. The
Company expects that it will make additional transfers of Receivables to the
Trust from time to time, but the timing and amount of any such additional
transfers will be dependent upon a number of factors, including the volume of
Contracts originated or acquired by the Company, prevailing interest rates,
availability of funds and general market conditions.
THE COMPANY AND THE SERVICER
AFS is a wholly-owned subsidiary of AmeriCredit Corp. AFS was incorporated
in Delaware on July 22, 1992. AFS purchases and services automobile loans which
are originated and assigned to AFS by automobile dealers. AFS is the primary
operating subsidiary of AmeriCredit Corp., a Texas corporation the common shares
of which are listed on the New York Stock Exchange. AFS's executive offices are
located at 200 Bailey Avenue, Fort Worth, Texas 76107-1220; telephone (817)
332-7000.
THE TRUSTEE
The Trustee for each series of Securities will be specified in the related
Prospectus Supplement. The Trustee's liability in connection with the issuance
and sale of the related Securities is limited solely to the express obligations
of such Trustee set forth in the related Trust Agreement.
With respect to each series of Securities, the procedures for the
resignation or removal of the Trustee and the appointment of a successor Trustee
shall be specified in the related Prospectus Supplement.
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DESCRIPTION OF THE SECURITIES
General
The Securities will be issued in series. Each series of Securities (or, in
certain instances, two or more series of Securities) will be issued pursuant to
a Trust Agreement. The following summaries (together with additional summaries
under "The Trust Agreement" below) describe all material terms and provisions
relating to the Securities common to each Trust Agreement. The summaries do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Trust Agreement for the related
Securities and the related Prospectus Supplement.
All of the Securities offered pursuant to this Prospectus and the related
Prospectus Supplement will be rated in one of the four highest rating categories
by one or more Rating Agencies.
The Securities will generally be styled as debt instruments, having a
principal balance and a specified Interest Rate. The Securities may either
represent beneficial ownership interests in the related Receivables held by the
related Trust or debt secured by certain assets of the related Issuer.
Each series or Class of Securities offered pursuant to this Prospectus may
have a different Interest Rate, which may be a fixed or adjustable interest
rate. The related Prospectus Supplement will specify the Interest Rate for each
series or Class of Securities described therein, or the initial interest rate
and the method for determining subsequent changes to the Interest Rate.
A series may include one or more Classes of Strip Securities entitled (i)
to principal distributions, with disproportionate, nominal or no interest
distributions, or (ii) to interest distributions, with disproportionate, nominal
or no principal distributions. In addition, a series of Securities may include
two or more Classes of Securities that differ as to timing, sequential order,
priority of payment, Interest Rate or amount of distribution of principal or
interest or both, or as to which distributions of principal or interest or both
on any Class may be made upon the occurrence of specified events, in accordance
with a schedule or formula, or on the basis of collections from designated
portions of the related pool of Receivables. Any such series may include one or
more Classes of Accrual Securities, as to which certain accrued interest will
not be distributed but rather will be added to the principal balance (or nominal
balance, in the case of Accrual Securities which are also Strip Securities)
thereof on each Payment Date, as hereinafter defined, or in the manner described
in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, a series may include
one or more other Classes of Senior Securities that are senior to one or more
other Classes of Subordinate Securities in respect of certain distributions of
principal and interest and allocations of losses on Receivables.
In addition, certain Classes of Senior (or Subordinate) Securities may be
senior to other Classes of Senior (or Subordinate) Securities in respect of such
distributions or losses.
General Payment Terms of Securities
As provided in the related Trust Agreement and as described in the related
Prospectus Supplement, Securityholders will be entitled to receive payments on
their Securities on the specified Payment Dates. Payment Dates with respect to
the Securities will occur monthly, quarterly or semi-annually, as described in
the related Prospectus Supplement.
The related Prospectus Supplement will describe the Record Date preceding
such Payment Date, as of which the Trustee or its paying agent will fix the
identity of the Securityholders for the purpose of receiving payments on the
next succeeding Payment Date. As more fully described in the related Prospectus
Supplement, the Payment Date may be the tenth, twelfth, fifteenth or
twenty-fifth day of each month (or, in the case of quarterly-pay Securities, the
tenth, twelfth, fifteenth or twenty-fifth day of every third month; and in the
case of semi-annual pay Securities, the tenth, twelfth, fifteenth or
twenty-fifth day
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of every sixth month) and the Record Date will be the close of business as of
the last day of the calendar month that precedes the calendar month in which
such Payment Date occurs.
Each Trust Agreement will describe a Remittance Period preceding each
Payment Date (for example, in the case of monthly-pay Securities, the calendar
month preceding the month in which a Payment Date occurs). As more fully
provided in the related Prospectus Supplement, collections received on or with
respect to the related Receivables held by a Trust during a Remittance Period
will be required to be remitted by the Servicer to the related Trustee prior to
the related Payment Date and will be used to fund payments to Securityholders on
such Payment Date. As may be described in the related Prospectus Supplement, the
related Trust Agreement may provide that all or a portion of the payments
collected on or with respect to the related Receivables may be applied by the
related Trustee to the acquisition of additional Receivables during a specified
period (rather than be used to fund payments of principal to Securityholders
during such period) with the result that the related Securities will possess an
interest-only period, also commonly referred to as a revolving period, which
will be followed by an amortization period. Any such interest only or revolving
period may, upon the occurrence of certain events to be described in the related
Prospectus Supplement, terminate prior to the end of the specified period and
result in the earlier than expected amortization of the related Securities.
In addition, and as may be described in the related Prospectus Supplement,
the related Trust Agreement may provide that all or a portion of such collected
payments may be retained by the Trustee (and held in certain temporary
investments, including Receivables) for a specified period prior to being used
to fund payments of principal to Securityholders.
Such retention and temporary investment by the Trustee of such collected
payments may be required by the related Trust Agreement for the purposes of (a)
slowing the amortization rate of the related Securities relative to the
installment payment schedule of the related Receivables, or (b) attempting to
match the amortization rate of the related Securities to an amortization
schedule established at the time such Securities are issued. Any such feature
applicable to any Securities may terminate upon the occurrence of events to be
described in the related Prospectus Supplement, resulting in distributions to
the specified Securityholders and an acceleration of the amortization of such
Securities.
Neither the Securities nor the underlying Receivables will be guaranteed
or insured by any governmental agency or instrumentality or the Company, the
Servicer, any Trustee or any of their respective affiliates unless specifically
set forth in the related Prospectus Supplement.
As may be described in the related Prospectus Supplement, Securities of
each series covered by a particular Trust Agreement will either evidence
specified beneficial ownership interests in the Trust Property or represent debt
secured by the related Trust Property. To the extent that any Trust Property
includes certificates of interest or participations in Receivables, the related
Prospectus Supplement will describe the material terms and conditions of such
certificates or participations.
Master Trusts
As may be described in the related Prospectus Supplement, each Trust
Agreement may provide that, pursuant to any one or more supplements thereto, the
Company may direct the related Trustee to issue from time to time new series
subject to the conditions described below (each such issuance a "Master Trust
New Issuance"). Each Master Trust New Issuance will have the effect of
decreasing the Residual Interest in the related Master Trust. Under each such
Master Trust Agreement, the Company may designate, with respect to any newly
issued series: (i) its name or designation; (ii) its initial principal amount
(or method for calculating such amount); (iii) its Interest Rate (or formula for
the determination thereof); (iv) the Payment Dates and the date or dates from
which interest shall accrue; (v) the method for allocating collections to
Securityholders of such series; (vi) any bank accounts to be used by such series
and the terms governing the operation of any such bank accounts; (vii) the
percentage used to calculate monthly servicing fees; (viii) the provider and
terms of any form of Credit Enhancement with respect thereto; (ix) the terms on
which the Securities of such series may be repurchased or remarketed to other
investors; (x) the number of Classes of Securities of such series, and if such
series consists of
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more than one Class, the rights and priorities of each such Class; (xi) the
extent to which the Securities of such series will be issuable in book-entry
form; (xii) the priority of such series with respect to any other series; and
(xiii) any other relevant terms. None of the Company, the Servicer, the related
Trustee or any Master Trust is required or intends to obtain the consent of any
Securityholder of any outstanding series to issue any additional series.
Each Master Trust Agreement provides that the Company may designate terms
such that each Master Trust New Issuance has an amortization period which may
have a different length and begin on a different date than such periods for any
series previously issued by the related Master Trust and then outstanding.
Moreover, each Master Trust New Issuance may have the benefits of Credit
Enhancements issued by enhancement providers different from the providers of the
Credit Enhancement, if any, with respect to any series previously issued by the
related Master Trust and then outstanding. Under each Master Trust Agreement,
the related Trustee shall hold any such Credit Enhancement only on behalf of the
Securityholders to which such Credit Enhancement relates. The Company will have
the option under each Master Trust Agreement to vary among series the terms upon
which a series may be repurchased by the Issuer or remarketed to other
investors. As more fully described in a related Prospectus Supplement, there is
no limit to the number of Master Trust New Issuances that the Company may cause
under a Master Trust Agreement. Each Master Trust will terminate only as
provided in the related Master Trust Agreement. There can be no assurance that
the terms of any Master Trust New Issuance might not have an impact on the
timing and amount of payments received by Securityholders of another series
issued by the same Master Trust.
Under each Master Trust Agreement and pursuant to a related supplement, a
Master Trust New Issuance may only occur upon the satisfaction of certain
conditions provided in each such Master Trust Agreement. The obligation of the
related Trustee to authenticate the Securities of any such Master Trust New
Issuance and to execute and deliver the supplement to the related Master Trust
Agreement is subject to the satisfaction of the following conditions: (a) on or
before the date upon which the Master Trust New Issuance is to occur, the
Company shall have given the related Trustee, the Servicer, the Rating Agency
and certain related providers of Credit Enhancement, if any, written notice of
such Master Trust New Issuance and the date upon which the Master Trust New
Issuance is to occur; (b) the Company shall have delivered to the related
Trustee a supplement to the related Master Trust Agreement, in form satisfactory
to such Trustee, executed by each party to the related Master Trust Agreement
other than such Trustee; (c) the Company shall have delivered to the related
Trustee any related Credit Enhancement agreement; (d) the related Trustee shall
have received confirmation from the Rating Agency that such Master Trust New
Issuance will not result in any Rating Agency reducing or withdrawing its rating
with respect to any other series or Class of such Trust (any such reduction or
withdrawal is referred to herein as a "Ratings Effect"); (e) the Company shall
have delivered to the related Trustee, the Rating Agency and certain providers
of Credit Enhancement, if any, an opinion of counsel acceptable to the related
Trustee that for federal income tax purposes (i) following such Master Trust New
Issuance the related Master Trust will not be deemed to be an association (or
publicly traded partnership) taxable as a corporation, (ii) such Master Trust
New Issuance will not affect the tax characterization as debt of Securities of
any outstanding series or Class issued by such Master Trust that were
characterized as debt at the time of their issuance and (iii) such Master Trust
New Issuance will not cause or constitute an event in which gain or loss would
be recognized by any Securityholders or the related Master Trust; and (f) any
other conditions specified in any supplement. Upon satisfaction of the above
conditions, the related Trustee shall execute the supplement to the related
Master Trust Agreement and issue the Securities of such new series.
Indexed Securities
To the extent so specified in any Prospectus Supplement, any class of Securities
of a given series may consist of Securities ("Indexed Securities") in which the
principal amount payable at the final scheduled Payment Date (the "Indexed
Principal Amount") is determined by reference to a measure (the "Index") which
will be related to (i) the difference in the rate of exchange between United
States dollars and a currency or composite currency (the "Indexed Currency")
specified in the applicable Prospectus Supplement (such Indexed Securities,
"Currency Indexed Securities"); (ii) the difference in the price of a specified
commodity (the "Indexed Commodity") on specified dates (such Indexed Securities,
"Commodity
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Indexed Securities"); (iii) the difference in the level of a specified stock
index (the "Stock Index"), which may be based on U.S. or foreign stocks, on
specified dates (such Indexed Securities, "Stock Indexed Securities"); or (iv)
such other objective price or economic measures as are described in the
applicable Prospectus Supplement. The manner of determining the Indexed
Principal Amount of an Indexed Security and historical and other information
concerning the Indexed Currency, the Indexed Commodity, the Stock Index or other
price or economic measures used in such determination will be set forth in the
applicable Prospectus Supplement, together with information concerning tax
consequences to the holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed
Security is based on an Index calculated or announced by a third party and such
third party either suspends the calculation or announcement of such Index or
changes the basis upon which such Index is calculated (other than changes
consistent with policies in effect at the time such Indexed Security was issued
and permitted changes described in the applicable Prospectus Supplement), then
such Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the applicable Prospectus Supplement on
the same basis, and subject to the same conditions and controls, as applied to
the original third party. If for any reason such index cannot be calculated on
the same basis and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of such Indexed Security
shall be calculated in the manner set forth in the applicable Prospectus
Supplement. Any determination of such independent calculation agent shall in the
absence of manifest error be binding on all parties.
Interest on an Indexed Security will be payable based on the amount
designated in the applicable Prospectus Supplement (the "Face Amount"). The
applicable Prospectus Supplement will describe whether the principal amount of
the related Indexed Security, if any, that would be payable upon redemption or
repayment prior to the applicable final scheduled Distribution Date will be the
Face Amount of such Indexed Security, the Indexed Principal Amount of such
Indexed Security at the time of redemption or repayment or another amount
described in such Prospectus Supplement.
Book-Entry Registration
As may be described in the related Prospectus Supplement, Securityholders
of a given series may hold their Securities through DTC (in the United States)
or CEDEL or Euroclear (in Europe) if they are participants of such systems, or
indirectly through organizations that are participants in such systems.
Cede, as nominee for DTC, will hold the global Securities in respect of a
given series. CEDEL and Euroclear will hold omnibus positions on behalf of the
CEDEL Participants (as defined below) and the Euroclear Participants (as defined
below) (collectively, the "Participants"), respectively, through customers'
securities accounts in CEDEL's and Euroclear's names on the books of their
respective depositaries (collectively, the "Depositaries") which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entries,
thereby eliminating the need for physical movement of notes or certificates.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations. Indirect access to the DTC system also is available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between CEDEL Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
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Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. CEDEL Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant CEDEL
Participant or Euroclear Participant on such business day. Cash received in
CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
CEDEL or Euroclear cash account only as of the business day following settlement
in DTC.
The Securityholders of a given series that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interests in, Securities of such series may do so only
through Participants and Indirect Participants. In addition, Securityholders of
a given series will receive all distributions of principal and interest through
the Participants who in turn will receive them from DTC. Under a book-entry
format, Securityholders of a given series may experience some delay in their
receipt of payments, since such payments will be forwarded by the applicable
Trustee to Cede, as nominee for DTC. DTC will forward such payments to its
Participants, which thereafter will forward them to Indirect Participants or
such Securityholders. It is anticipated that the only "Securityholder" in
respect of any series will be Cede, as nominee of DTC. Securityholders of a
given series will not be recognized as Securityholders of such series, and such
Securityholders will be permitted to exercise the rights of Securityholders of
such series only indirectly through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Securities of a given series among Participants on whose behalf it acts with
respect to such Securities and to receive and transmit distributions of
principal of, and interest on, such Securities. Participants and Indirect
Participants with which the Securityholders of a given series have accounts with
respect to such Securities similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective
Securityholders of such series. Accordingly, although such Securityholders will
not possess Securities, the Rules provide a mechanism by which Participants will
receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder of a given series to pledge Securities of such series to persons
or entities that do not participate in the DTC system, or to otherwise act with
respect to such Securities, may be limited due to the lack of a physical
certificate for such Securities.
DTC will advise the Trustee in respect of each series that it will take
any action permitted to be taken by a Securityholder of the related series only
at the direction of one or more Participants to whose accounts with DTC the
Securities of such series are credited. DTC may take conflicting actions with
respect to other undivided interests to the extent that such actions are taken
on behalf of Participants whose holdings include such undivided interests.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes
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in accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depository, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to CEDEL is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a CEDEL Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of the
Euroclear System ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 28 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers with
DTC described above. Euroclear is operated by Morgan Guaranty Trust Company of
New York, Brussels, Belgium office, under contract with Euroclear Clearance
System, S.C., a Belgian cooperative corporation (the "Cooperative"). All
operations are conducted by the "Euroclear Operator" (as defined below), and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for the Euroclear System on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
Underwriters. Indirect access to the Euroclear System is also available to other
firms that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The "Euroclear Operator" is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of relationship with persons holding through Euroclear Participants.
Except as required by law, the Trustee in respect of a series will not
have any liability for any aspect of the records relating to or payments made or
account of beneficial ownership interests of the related Securities held by
Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Definitive Notes
As may be described in the related Prospectus Supplement, the Securities
will be issued in fully registered, certificated form ("Definitive Securities")
to the Securityholders of a given series or their nominees, rather than to DTC
or its nominee, only if (i) the Trustee in respect of the related series advises
in writing that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to such Securities and such Trustee
is unable to locate a qualified successor, (ii) such Trustee, at its option,
elects to terminate the book-entry-system through DTC or (iii) after the
occurrence of an
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"Event of Default" under the related Indenture or a default by the Servicer
under the related Trust Agreements, Securityholders representing at least a
majority of the outstanding principal amount of such Securities advise the
applicable Trustee through DTC in writing that the continuation of a book-entry
system through DTC (or a successor thereto) is no longer in such
Securityholders' best interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee will be required to notify all such
Securityholders through Participants of the availability of Definitive
Securities. Upon surrender by DTC of the definitive certificates representing
such Securities and receipt of instructions for re-registration, the applicable
Trustee will reissue such Securities as Definitive Securities to such
Securityholders.
Distributions of principal of, and interest on, such Securities will
thereafter be made by the applicable Trustee in accordance with the procedures
set forth in the related Indenture or Trust Agreement directly to holders of
Definitive Securities in whose names the Definitive Securities were registered
at the close of business on the applicable Record Date specified for such
Securities in the related Prospectus Supplement. Such distributions will be made
by check mailed to the address of such holder as it appears on the register
maintained by the applicable Trustee. The final payment on any such Security,
however, will be made only upon presentation and surrender of such Security at
the office or agency specified in the notice of final distribution to the
applicable Securityholders.
Definitive Securities in respect of a given series of Securities will be
transferable and exchangeable at the offices of the applicable Trustee or of a
certificate registrar named in a notice delivered to holders of such Definitive
Securities. No service charge will be imposed for any registration of transfer
or exchange, but the applicable Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge imposed in connection therewith.
Reports to Securityholders
With respect to each series of Securities, on or prior to each Payment
Date for such series, the Servicer or the related Trustee will forward or cause
to be forwarded to each holder of record of such class of Securities a statement
or statements with respect to the related Trust Property setting forth the
information specifically described in the related Trust Agreement which
generally will include the following information:
(i) the amount of the distribution with respect to each class of
Securities;
(ii) the amount of such distribution allocable to principal;
(iii) the amount of such distribution allocable to interest;
(iv) the Pool Balance, if applicable, as of the close of business on
the last day of the related Remittance Period;
(v) the aggregate outstanding principal balance and the Pool Factor
for each Class of Securities after giving effect to all payments reported
under (ii) above on such Payment Date;
(vi) the amount paid to the Servicer, if any, with respect to the
related Remittance Period;
(vii) the amount of the aggregate purchase amounts for Receivables
that have been reacquired, if any, for such Remittance Period; and
(viii) the amount of coverage under any letter of credit, financial
guaranty insurance policy, reserve account or other form of credit
enhancement covering default risk as of the close of business on the
applicable Payment Date and a description of any Credit Enhancement
substituted therefor.
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Each amount set forth pursuant to subclauses (i), (ii), (iii) and (v) with
respect to the Securities of any series will be expressed as a dollar amount per
$1,000 of the initial principal balance of such Securities, as applicable. The
actual information to be set forth in statements to Securityholders of a series
will be described in the related Prospectus Supplement.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year, the applicable Trustee will provide to the
Securityholders a statement containing the amounts described in (ii) and (iii)
above for that calendar year and any other information required by applicable
tax laws, for the purpose of the Securityholders' preparation of federal income
tax returns.
Forward Commitments; Pre-Funding
A Trust may enter into an agreement (each, a "Forward Purchase
Agreement") with the Sponsor whereby the Sponsor will agree to transfer
additional Mortgage Loans to such Trust following the date on which such Trust
is established and the related Certificates are issued. The Trust may enter into
Forward Purchase Agreements to permit the acquisition of additional Mortgage
Loans that could not be delivered by the Sponsor or have not formally completed
the origination process, in each case prior to the date on which the
Certificates are delivered to the Certificateholders (the "Closing Date"). Any
Forward Purchase Agreement will require that any Mortgage Loans so transferred
to the Trust conform to the requirements specified in such Forward Purchase
Agreement.
If a Forward Purchase Agreement is to be utilized, and unless
otherwise specified in the related Prospectus Supplement, the related Trustee
will be required to deposit in a segregated account (each, a "Pre-Funding
Account") up to 100% of the net proceeds received by the Trustee in connection
with the sale of one or more classes of Certificates of the related Series; the
additional Mortgage Loans will be transferred to the related Trust in exchange
for money released to the Sponsor from the related Pre-Funding Account. Each
Forward Purchase Agreement will set a specified period (the "Funding Period")
during which any such transfers must occur; for a Trust which elects federal
income treatment as REMIC or as a grantor trust, the related Funding Period will
be limited to three months from the date such Trust is established; for a Trust
which is treated as a mere security device for federal income tax purposes, the
related Funding Period will be limited to nine months from the date such Trust
is established. The Forward Purchase Agreement or the related Pooling and
Servicing Agreement will require that, if all moneys originally deposited to
such Pre-Funding Account are not so used by the end of the related Funding
Period, then any remaining moneys will be applied as a mandatory prepayment of
the related class or classes of Certificates as specified in the related
Prospectus Supplement.
During the Funding Period the moneys deposited to the Pre-Funding
Account will either (i) be held uninvested or (ii) will be invested in
cash-equivalent investments rated in one of the four highest rating categories
by at least one nationally recognized statistical rating orgnaization and which
will either mature prior to the end of the Funding Period, or will be drawable
on demand and in any event, will not constitute the type of investment which
would require registration of the related Trust as an "investment company" under
the Investment Company Act of 1940, as amended.
DESCRIPTION OF THE TRUST AGREEMENTS
The following summary describes certain terms of each Trust Agreement
pursuant to which a Trust Property will be created and the related Securities in
respect of such Trust Property will be issued. For purposes of this Prospectus,
the term "Trust Agreement" as used with respect to a Trust means, collectively,
and except as otherwise specified, any and all agreements relating to the
establishment of the related Trust, the servicing of the related Receivables and
the issuance of the related Securities, including without limitation the
Indenture, (i.e. pursuant to which any Notes shall be issued). Forms of the
Trust Agreement have been filed as exhibits to the Registration Statement of
which the Prospectus forms a part. The summary does not purport to be complete.
It is qualified in its entirety by reference to the provisions of the Trust
Agreements.
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Origination of the Receivables by the Company and Acquisition of the Receivables
Pursuant to a Receivables Acquisition Agreement
On the closing date specified with respect to any given series of
Securities (the "Closing Date"), the Company or a Finance Subsidiary will
transfer Receivables originated by the Company either to a Trust pursuant to a
Pooling Agreement, or will pledge the Company's or the Finance Subsidiary's
right, title and interests in and to such Receivables to a Trustee on behalf of
the Securityholders pursuant to an Indenture. The Company or a Finance
Subsidiary will either transfer the Receivables to a Trust pursuant to a Pooling
Agreement, or will pledge the Company's right, title and interests in and to
such Receivables to a Trustee on behalf of Securityholders pursuant to an
Indenture. The obligations of the Company or a Finance Subsidiary and the
Servicer under the related Trust Agreement include those specified below and in
the related Prospectus Supplement.
As more fully described in the related Prospectus Supplement, the Company
will be obligated to acquire from the related Trust Property its interest in any
Receivable transferred to a Trust or pledged to a Trustee on behalf of
Securityholders if the interest of the Securityholders therein is materially
adversely affected by a breach of any representation or warranty made by the
Company with respect to such Receivable, which breach has not been cured
following the discovery by or notice to the Company of the breach. In addition,
if so specified in the related Prospectus Supplement, the Company may from time
to time reacquire certain Receivables or substitute other Receivables for such
Receivable subject to specified conditions set forth in the related Trust
Agreement.
Accounts
With respect to each series of Securities issued by a Trust, the Servicer
will establish and maintain with the applicable Trustee one or more accounts, in
the name of such Trustee on behalf of the related Securityholders, into which
all payments made on or with respect to the related Receivables will be
deposited (the "Collection Account"). The Servicer will also establish and
maintain with such Trustee separate accounts, in the name of such Trustee on
behalf of such Securityholders, in which amounts released from the Collection
Account and the reserve account or other Credit Enhancement, if any, for
distribution to such Securityholders will be deposited and from which
distributions to such Securityholders will be made (the "Distribution Account").
Any other accounts to be established with respect to a Trust, including
any reserve account, will be described in the related Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the
Distribution Account, any reserve account and other accounts identified as such
in the related Prospectus Supplement (collectively, the "Trust Accounts") shall
be invested as provided in the related Trust Agreement in Eligible Investments.
"Eligible Investments" are generally limited to investments acceptable to the
Rating Agencies as being consistent with the rating of such Securities. Subject
to certain conditions, Eligible Investments may include securities issued by the
Company, the Servicer or their respective affiliates or other trusts created by
the Company or its affiliates. Except as described below or in the related
Prospectus Supplement, Eligible Investments are limited to obligations or
securities that mature not later than the business day immediately preceding the
related Payment Date. However, subject to certain conditions, funds in the
reserve account may be invested in securities that will not mature prior to the
date of the next distribution and will not be sold to meet any shortfalls. Thus,
the amount of cash in any reserve account at any time may be less than the
balance of such reserve account. If the amount required to be withdrawn from any
reserve account to cover shortfalls in collections on the related Receivables
exceeds the amount of cash in such reserve account a temporary shortfall in the
amounts distributed to the related Securityholders could result, which could, in
turn, increase the average life of the Securities of such series. Except as
otherwise specified in the related Prospectus Supplement, investment earnings on
funds deposited in the applicable Trust Accounts, net of losses and investment
expenses (collectively, "Investment Earnings"), shall be deposited in the
applicable Collection Account on each Payment Date and shall be treated as
collections of interest on the related Receivables.
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The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution has a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means, with respect to a Trust, (a) the corporate trust
department of the related Indenture Trustee or the related Trustee, as
applicable, or (b) a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), which (i) (A) has either
(w) a long-term unsecured debt rating acceptable to the Rating Agencies or (x) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies or (B) the parent corporation of which has either (y) a
long-term unsecured debt rating acceptable to the Rating Agencies or (z) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies and (ii) whose deposits are insured by the FDIC.
The Servicer
The Servicer under each Trust Agreement will be named in the related
Prospectus Supplement. The entity serving as Servicer may be the Company or an
affiliate of the Company and may have other business relationships with the
Company or the Company's affiliates. The Servicer with respect to each series
will service the Receivables contained in the Trust Fund for such series. Any
Servicer may delegate its servicing responsibilities to one or more
sub-servicers, but will not be relieved of its liabilities with respect thereto.
The Servicer will make certain representations and warranties regarding
its authority to enter into, and its ability to perform its obligations under,
the related Trust Agreement. An uncured breach of such a representation or
warranty that in any respect materially and adversely affects the interests of
the Securityholders will constitute a Servicer Default (as hereinafter defined)
by the Servicer under the related Trust Agreement.
Servicing Procedures
Each Trust Agreement will provide that the Servicer will make reasonable
efforts to collect all payments due with respect to the Receivables which are
part of the Trust Fund and, in a manner consistent with the related Trust
Agreement, will continue such collection procedures as the Servicer follows with
respect to the particular type of Receivable in the particular pool it services
for itself and others. Consistent with its normal procedures, the Servicer may,
in its discretion and on a case-by-case basis, arrange with the Obligor on a
Receivable to extend or modify the payment schedule. Some of such arrangements
(including, without limitation any extension of the payment schedule beyond the
final scheduled Payment Date for the related Securities) may result in the
Servicer acquiring such Receivable if such Contract becomes a Defaulted
Contract. The Servicer may sell the Vehicle securing the respective Defaulted
Contract, if any, at a public or private sale, or take any other action
permitted by applicable law.
See "Certain Legal Aspects of the Receivables".
The material aspects of any particular Servicer's collections and other
relevant procedures will be set forth in the related Prospectus Supplement.
Payments on Receivables
With respect to each series of Securities, unless otherwise specified in
the related Prospectus Supplement, the Servicer will deposit into the Collection
Account all payments on the related Receivables (from whatever source) and all
proceeds of such Receivables collected within three (3) business days of receipt
thereof in the related collection facility, such as a lock-box account or
collection account. Moneys deposited in such collection facility for Trust
Property may be commingled with funds from other sources.
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Servicing Compensation
As may be described in the related Prospectus Supplement with respect to
any series of securities issued by a Trust, the Servicer will be entitled to
receive a servicing fee for each Collection Period (the "Servicing Fee") in an
amount equal to a specified percentage per annum (as set forth in the related
Prospectus Supplement, the "Servicing Fee Rate") of the value of the assets of
the Trust Property, generally as of the first day of such Collection Period.
Each Prospectus Supplement and Servicing Agreement will specify the priority of
distributions with respect to the Servicing Fee (together with any portion of
the Servicing Fee that remains unpaid from prior Payment Dates). Generally, the
Servicing Fee will be paid prior to any distribution to the related
Securityholders.
The Servicer will also collect and retain any late fees, the penalty
portion of interest paid on past due amounts and other administrative fees or
similar charges allowed by applicable law with respect to the Receivables, and
will be entitled to reimbursement from each Trust for certain liabilities.
Payments by or on behalf of Obligors will be allocated to scheduled payments and
late fees and other charges in accordance with the Servicer's normal practices
and procedures.
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of similar types of receivables as an agent
for their beneficial owner, including collecting and posting all payments,
responding to inquiries of Obligors on the related Receivables, investigating
delinquencies, sending billing statements to Obligors, reporting tax information
to Obligors, paying costs of collection and disposition of defaults, and
policing the collateral. The Servicing Fee also will compensate the Servicer for
administering the related Receivables, accounting for collections and furnishing
statements to the applicable Trustee and the applicable Indenture Trustee, if
any, with respect to distributions. The Servicing Fee also will reimburse the
Servicer for certain taxes, accounting fees, outside auditor fees, data
processing costs and other costs incurred in connection with administering the
Receivables.
Distributions
With respect to each series of Securities, beginning on the Payment Date
specified in the related Prospectus Supplement, distributions of principal and
interest (or, where applicable, of principal or interest only) on each Class of
such Securities entitled thereto will be made by the applicable Indenture
Trustee to the holders of Notes (the "Noteholders") and by the applicable
Trustee to the holders of Certificates (the "Certificateholders") of such
series. The timing, calculation, allocation, order, source, priorities of and
requirements for each class of Noteholders and all distributions to each class
of Certificateholders of such series will be set forth in the related Prospectus
Supplement.
With respect to each series of Securities, on each Payment Date
collections on the related Receivables will be transferred from the Collection
Account to the Distribution Account for distribution to Securityholders,
respectively, to the extent provided in the related Prospectus Supplement.
Credit Enhancement, such as a reserve account, may be available to cover any
shortfalls in the amount available for distribution on such date, to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a Class of Securities of a given series
will be subordinate to distributions in respect of interest on such Class, and
distributions in respect of the Certificates of such series may be subordinate
to payments in respect of the Notes of such series.
Credit and Cash Flow Enhancements
The amounts and types of Credit Enhancement arrangements, if any, and the
provider thereof, if applicable, with respect to each class of Securities of a
given series will be set forth in the related Prospectus Supplement. If and to
the extent provided in the related Prospectus Supplement, credit enhancement may
be in the form of a Policy, subordination of one or more Classes of Securities,
reserve accounts, overcollateralization, letters of credit, credit or liquidity
facilities, third party payments or other support, surety bonds, guaranteed cash
deposits or such other arrangements as may be described in the
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related Prospectus Supplement or any combination of two or more of the
foregoing. If specified in the applicable Prospectus Supplement, Credit
Enhancement for a Class of Securities may cover one or more other Classes of
Securities of the same series, and Credit Enhancement for a series of Securities
may cover one or more other series of Securities.
The presence of Credit Enhancement for the benefit of any Class or series
of Securities is intended to enhance the likelihood of receipt by the
Securityholders or such Class or series of the full amount of principal and
interest due thereon and to decrease the likelihood that such Securityholders
will experience losses. As more specifically provided in the related Prospectus
Supplement, the credit enhancement for a Class or series of Securities will not
provide protection against all risks of loss and will not guarantee repayment of
the entire principal balance and interest thereon. If losses occur which exceed
the amount covered by any Credit Enhancement or which are not covered by any
Credit Enhancement, Securityholders of any Class or series will bear their
allocable share of deficiencies, as described in the related Prospectus
Supplement. In addition, if a form of Credit Enhancement covers more than one
series of Securities, Securityholders of any such series will be subject to the
risk that such Credit Enhancement will be exhausted by the claims of
Securityholders of other series.
Statements to Indenture Trustees and Trustees
Prior to each Payment Date with respect to each series of Securities, the
Servicer will provide to the applicable Indenture Trustee and/or the applicable
Trustee and Credit Enhancer as of the close of business on the last day of the
preceding related Collection Period a statement setting forth substantially the
same information as is required to be provided in the periodic reports provided
to Securityholders of such series described under "Description of the
Securities--Reports to Securityholders".
Evidence as to Compliance
Each Trust Agreement will provide that a firm of independent public
accountants will furnish to the related Trust and/or the applicable Indenture
Trustee and Credit Enhancer, annually, a statement as to compliance by the
Servicer during the preceding twelve months (or, in the case of the first such
certificate, the period from the applicable Closing Date) with certain standards
relating to the servicing of the Receivables.
Each Trust Agreement will also provide for delivery to the related Trust
and/or the applicable Indenture Trustee of a certificate signed by an officer of
the Servicer stating that the Servicer either has fulfilled its obligations
under such Trust Agreement in all material respects throughout the preceding 12
months (or, in the case of the first such certificate, the period from the
applicable Closing Date) or, if there has been a default in the fulfillment of
any such obligation in any material respect, describing each such default. The
Servicer also will agree to give each Indenture Trustee and each Trustee notice
of certain Servicer Defaults (as hereinafter defined) under the related Trust
Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the applicable Indenture
Trustee or the applicable Trustee.
Certain Matters Regarding the Servicers
Each Trust Agreement will provide that the Servicer may not resign from
its obligations and duties as Servicer thereunder, except upon determination
that the performance by the Servicer of such duties is no longer permissible
under applicable law. No such resignation will become effective until the
related Trustee or a successor servicer has assumed the Servicer's servicing
obligations and duties under the Trust Agreement.
Except as otherwise provided in the related Prospectus Supplement, each
Trust Agreement will further provide that neither the Servicer nor any of its
respective directors, officers, employees, or agents shall be under any
liability to the related Issuer or the related Securityholders for taking any
action or for refraining from taking any action pursuant to such Trust
Agreement, or for errors in judgment; provided,
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however, that neither the Servicer nor any such person will be protected against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties thereunder. In addition, such Trust
Agreement will provide that the Servicer is under no obligation to appear in,
prosecute, or defend any legal action that is not incidental to its servicing
responsibilities under such Trust Agreement and that, in its opinion, may cause
it to incur any expense or liability.
Under the circumstances specified in any such Trust Agreement, any entity
into which the Servicer may be merged or consolidated, or any entity resulting
from any merger or consolidation to which the Servicer is a party, or any entity
succeeding to the business of the Servicer or, with respect to its obligations
as Servicer, which corporation or other entity in each of the foregoing cases
assumes the obligations of the Servicer, will be the successor to the Servicer
under such Trust Agreement.
Servicer Default
Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under a Trust Agreement will include (i) any failure by the
Servicer to deliver to the applicable Trustee for deposit in any of the related
Trust Accounts any required payment or to direct such Trustee to make any
required distributions therefrom, which failure continues unremedied for more
than three (3) Business Days after written notice from such Trustee is received
by the Servicer or after discovery by the Servicer; (ii) any failure by the
Servicer duly to observe or perform in any material respect any other covenant
or agreement in such Trust Agreement, which failure materially and adversely
affects the rights of the related Securityholders and which continues unremedied
for more than thirty (30) days after the giving of written notice of such
failure (1) to the Servicer by the applicable Trustee or (2) to the Servicer,
and to the applicable Trustee by holders of the related Securities, as
applicable, evidencing not less than 50% of the voting rights of such
outstanding Securities; (iii) any Insolvency Event; and (iv) any claim being
made on a Policy issued as Credit Enhancement. An "Insolvency Event" shall mean
financial insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings with respect to the Servicer and certain
actions by the Servicer indicating its insolvency, reorganization pursuant to
bankruptcy proceedings, or inability to pay its obligations.
Rights upon Servicer Default
As more fully described in the related Prospectus Supplement, as long as a
Servicer Default under a Trust Agreement remains unremedied, the applicable
Trustee, Credit Enhancer or holders of Securities of the related series
evidencing not less than 50% of the voting rights of such then outstanding
Securities may terminate all the rights and obligations of the Servicer, if any,
under such Trust Agreement, whereupon a successor servicer appointed by such
Trustee or such Trustee will succeed to all the responsibilities, duties and
liabilities of the Servicer under such Trust Agreement and will be entitled to
similar compensation arrangements. If, however, a bankruptcy trustee or similar
official has been appointed for the Servicer, and no Servicer Default other than
such appointment has occurred, such bankruptcy trustee or official may have the
power to prevent the applicable Trustee or such Securityholders from effecting a
transfer of servicing. In the event that the Trustee is unwilling or unable to
so act, it may appoint, or petition a court of competent jurisdiction for the
appointment of, a successor with a net worth of at least $25,000,000 and whose
regular business includes the servicing of a similar type of receivables. Such
Trustee may make such arrangements for compensation to be paid, which in no
event may be greater than the servicing compensation payable to the Servicer
under the related Trust Agreement.
Waiver of Past Defaults
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement and subject to the approval of any Credit Enhancer, the
holders of Notes evidencing at least a majority of the voting rights of such
then outstanding Securities may, on behalf of all Securityholders of the related
Securities, waive any default by the Servicer in the performance of its
obligations under the related Trust Agreement and its consequences, except a
default in making any required deposits to or payments from
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any of the Trust Accounts in accordance with such Trust Agreement. No such
waiver shall impair the Securityholders' rights with respect to subsequent
defaults.
Amendment
As more fully described in the related Prospectus Supplement, each of the
Trust Agreements may be amended by the parties thereto, without the consent of
the related Securityholders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Trust
Agreements or of modifying in any manner the rights of such Securityholders;
provided that such action will not, in the opinion of counsel satisfactory to
the applicable Trustee, materially and adversely affect the interests of any
such Securityholder and subject to the approval of any Credit Enhancer. As may
be described in the related Prospectus Supplement, the Trust Agreements may also
be amended by the Company, the Servicer, and the applicable Trustee with the
consent of the holders of Securities evidencing at least a majority of the
voting rights of such then outstanding Securities for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
such Trust Agreements or of modifying in any manner the rights of such
Securityholders; provided, however, that no such amendment may (i) increase or
reduce in any manner the amount or priority of, or accelerate or delay the
timing of, collections of payments on the related Receivables or distributions
that are required to be made for the benefit of such Securityholders or (ii)
reduce the aforesaid percentage of the Securities of such series which are
required to consent to any such amendment, without the consent of the
Securityholders of such series.
Insolvency Event
As described in the related Prospectus Supplement, if an Insolvency Event
occurs with respect to a Debtor relating to the applicable Trust Property, the
related Trust will terminate, and the Receivables of the related Trust Property
will be liquidated and each such Trust will be terminated 90 days after the date
of such Insolvency Event, unless, before the end of such 90-day period, the
Trustee of such Trust shall have received written instructions from each of the
related Securityholders (other than the Company) and/or Credit Enhancer to the
effect that such party disapproves of the liquidation of such Receivables.
Promptly after the occurrence of any Insolvency Event with respect to a Debtor,
notice thereof is required to be given to such Securityholders and/or Credit
Enhancer; provided, however, that any failure to give such required notice will
not prevent or delay termination of any Trust. Upon termination of any Trust,
the applicable Trustee shall direct that the assets of such Trust be promptly
sold (other than the related Trust Accounts) in a commercially reasonable manner
and on commercially reasonable terms. The proceeds from any such sale,
disposition or liquidation of such Receivables will be treated as collections on
such Receivables and deposited in the related Collection Account. If the
proceeds from the liquidation of such Receivables and any amounts on deposit in
the Reserve Account, if any, and the related Distribution Account are not
sufficient to pay the Securities of the related series in full, and no
additional Credit Enhancement is available, the amount of principal returned to
Securityholders will be reduced and some or all of such Securityholders will
incur a loss.
Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
any related Trust without the unanimous prior approval of all Certificateholders
(including the Company, if applicable) of such Trust and the delivery to such
Trustee by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that such Trust is insolvent.
Termination
With respect to each Trust, the obligations of the Servicer, the Company
and the applicable Trustee pursuant to the related Trust Agreement will
terminate upon the earlier to occur of (i) the maturity or other liquidation of
the last related Receivable and the disposition of any amounts received upon
liquidation of any such remaining Receivables and (ii) the payment to
Securityholders of the related series of all amounts required to be paid to them
pursuant to such Trust Agreement. As more fully described in the related
Prospectus Supplement, in order to avoid excessive administrative expense, the
Servicer
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will be permitted in respect of the applicable Trust Property, unless otherwise
specified in the related Prospectus Supplement, at its option to purchase from
such Trust Property, as of the end of any Collection Period immediately
preceding a Payment Date, if the Pool Balance of the related Contracts is less
than a specified percentage (set forth in the related Prospectus Supplement) of
the initial Pool Balance in respect of such Trust Property, all such remaining
Receivables at a price equal to the aggregate of the Purchase Amounts thereof as
of the end of such Collection Period. The related Securities will be redeemed
following such purchase.
If and to the extent provided in the related Prospectus Supplement with
respect to the Trust Property, the applicable Trustee will, within ten days
following a Payment Date as of which the Pool Balance is equal to or less than
the percentage of the initial Pool Balance specified in the related Prospectus
Supplement, solicit bids for the purchase of the Receivables remaining in such
Trust, in the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If such Trustee receives satisfactory bids as described
in such Prospectus Supplement, then the Receivables remaining in such Trust
Property will be sold to the highest bidder.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement may effect the prepayment of the
Certificates of such series.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
General
The transfer of Receivables by the Company or its Finance Subsidiary to
the Trust pursuant to the related Trust Agreement, the perfection of the
security interests in the Receivables and the enforcement of rights to realize
on the Vehicles as collateral for the Receivables are subject to a number of
federal and state laws, including the UCC as in effect in various states. As
specified in each Prospectus Supplement, the Servicer will take such action as
is required to perfect the rights of the Trustee in the Receivables. If, through
inadvertence or otherwise, a third party were to purchase (including the taking
of a security interest in) a Receivable for new value in the ordinary course of
its business, without actual knowledge of the Trust's interest, and take
possession of a Receivable, the purchaser would acquire an interest in such
Receivable superior to the interest of the Trust. As further specified in each
Prospectus Supplement, no action will be taken to perfect the rights of the
Trustee in proceeds of any insurance policies covering individual Vehicles or
Obligors. Therefore, the rights of a third party with an interest in such
proceeds could prevail against the rights of the Trust prior to the time such
proceeds are deposited by the Servicer into a Trust Account.
Security Interests in the Financed Vehicles
General
Retail installment sale contracts such as the Receivables evidence the
credit sale of automobiles and light duty trucks by dealers to consumers. The
contracts also constitute personal property security agreements and include
grants of security interests in the related automobiles and light duty trucks
under the UCC. Perfection of security interests in automobiles and light duty
trucks is generally governed by the vehicle registration or titling laws of the
state in which each vehicle is registered or titled. In most states a security
interest in a vehicle is perfected by notation of the secured party's lien on
the vehicle's certificate of title.
Perfection
Pursuant to the Trust Agreement, the Company will sell and assign the
Receivables it has originated or acquired and its security interests in the
Vehicles to the Trustee. Alternatively, the Company
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may sell and assign the Receivables and its interest in the Vehicles to a
Finance Subsidiary which will, in turn, sell and assign such Receivables and
related security interests to the Trustee. Each of the related Prospectus
Supplements will specify whether, because of the administrative burden and
expense, the Company, the Servicer or the Trustee will amend any certificate of
title to identify the Trustee as the new secured party on the certificates of
title relating to the Vehicles. Each of the related Prospectus Supplements will
specify the UCC financing statements to be filed in order to perfect the
transfer to the Finance Subsidiary of Receivables and the transfer by the
Finance Subsidiary to the Trustee of the Receivables. Further, although the
Trustee will not rely on possession of the Receivables as the legal basis for
the perfection of its interest therein or in the security interests in the
Vehicles, the Servicer, as specified in the related Prospectus Supplement, will
continue to hold the Receivables and any certificates of title relating to the
Vehicles in its possession as custodian for the Trustee pursuant to the related
Trust Agreement which, as a practical matter, should preclude any other party
from claiming a competing security interest in the Receivables on the basis that
the security interest is perfected by possession.
A security interest in a motor vehicle registered in most states may be
perfected against creditors and subsequent purchasers without notice for
valuable consideration only by one or more of the following: depositing with the
related Department of Motor Vehicles or analogous state office a properly
endorsed certificate of title for the vehicle showing the secured party as legal
owner or lienholder thereon, or filing a sworn notice of lien with the related
Department of Motor Vehicles or analogous state office and noting such lien on
the certificate of title, or, if the vehicle has not been previously registered,
filing an application in usual form for an original registration together with
an application for registration of the secured party as legal owner or
lienholder, as the case may be. However, under the laws of most states, a
transferee of a security interest in a motor vehicle is not required to reapply
to the related Department of Motor Vehicles or analogous state office for a
transfer of registration when the security interest is sold or when the interest
of the transferee arises from the transfer of a security interest by the
lienholder to secure payment or performance of an obligation. Accordingly, under
the laws of such states, the assignment by the Company of its interest in the
Receivables to the Trustee under the related Trust Agreement is an effective
conveyance of the security interest of the Company in the Receivables, and
specifically, the Vehicles, without such re-registration and without amendment
of any lien noted on the related certificate of title, and (subject to the
immediately succeeding paragraphs) the Trustee will succeed to the Company's
rights as secured party.
Although re-registration of a Vehicle is not necessary to convey a
perfected security interest in the Vehicles to the Trustee, the Trustee's
security interest could be defeated through fraud, negligence, forgery or
administrative error since it may not be listed as legal owner or lienholder on
the certificates of title to the Vehicles. However, in the absence of fraud,
negligence, forgery or administrative error , the notation of the Company's lien
on the certificates of title will be sufficient to protect the Trust against the
rights of subsequent purchasers of a Vehicle or subsequent creditors who take a
security interest in a Vehicle. In the related Trust Agreement, the Company or
its Finance Subsidiary will represent and warrant that it has, or has taken all
action necessary to obtain, a perfected security interest in each Vehicle. If
there are any Vehicles as to which the Company failed to obtain a first priority
perfected security interest, the Company's security interest would be
subordinate to, among others, subsequent purchasers of such Vehicles and holders
of first priority perfected security interests therein. Such a failure, however,
would constitute a breach of the Company's or the Finance Subsidiary's
representations and warranties under the related Trust Agreement. Accordingly,
pursuant to the related Trust Agreement, the Company or Finance Subsidiary would
be required to repurchase the related Receivables from the Trustee unless the
breach were cured.
Continuity of Perfection
Under the laws of most states, a perfected security interest in a motor
vehicle continues for four months after the vehicle is moved to a new state from
the one in which it is initially registered and thereafter until the owner
re-registers such motor vehicle in the new state. A majority of states generally
require surrender of a certificate of title to re-register a vehicle. In those
states that require a secured party to hold possession of the certificate of
title to maintain perfection of the security interest, the secured party would
learn of the re-registration through the request from the Obligor under the
related installment
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sale contract to surrender possession of the certificate of title to assist in
such re-registration. In the case of vehicles registered in states providing for
the notation of a lien on the certificate of title but not requiring possession
by the secured party (such as Texas), the secured party would receive notice of
surrender from the state of re-registration if the security interest is noted on
the certificate of title. Thus, the secured party would have the opportunity to
reperfect its security interest in the vehicle in the state of relocation.
However, these procedural safeguards will not protect the secured party if,
through fraud, forgery or administrative error, the debtor somehow procures a
new certificate of title that does not list the secured party's lien.
Additionally, in states that do not require surrender of a certificate of title
for re-registration of a vehicle, re-registration could defeat perfection. In
each of the Trust Agreements, the Servicer will be required to take steps to
effect re-perfection upon receipt of notice of re-registration or information
from the Obligor as to relocation. Similarly, when an Obligor sells a Vehicle,
the Servicer will have an opportunity to require satisfaction of the related
Receivable before release of the lien, either because the Servicer will be
required to surrender possession of the certificate of title in connection with
the sale, or because the Servicer will receive notice as a result of its lien
noted thereon. Pursuant to the related Trust Agreement, the related Servicer
will hold the certificates of title for the related Vehicles as custodian for
the Trustee. Under the related Trust Agreement, the Servicer will be obligated
to take appropriate steps, at its own expense, to maintain perfected security
interests in the Vehicles.
Priority of Certain Liens Arising by Operation of Law
Under the laws of most states, certain statutory liens such as mechanics',
repairmen's and garagemen's liens for repairs performed on a motor vehicle,
motor vehicle accident liens, towing and storage liens, liens arising under
various state and federal criminal statutes and liens for unpaid taxes take
priority over even a first priority perfected security interest in such vehicle
by operation of law. The UCC also grants priority to certain federal tax liens
over the lien of a secured party. The laws of most states and federal law permit
the confiscation of motor vehicles by governmental authorities under certain
circumstances if used in or acquired with the proceeds of unlawful activities,
which may result in the loss of a secured party's perfected security interest in
a confiscated vehicle. The Company will represent and warrant to the Trustee in
the related Trust Agreement that, as of the related Closing Date, each security
interest in a Vehicle shall be a valid, subsisting and enforceable first
priority security interest in such Vehicle. However, liens for repairs or taxes
superior to the security interest of the Trustee in any such Vehicle, or the
confiscation of such Vehicle, could arise at any time during the term of a
Receivable. No notice will be given to the Trustee or any Securityholder in the
event such a lien or confiscation arises and any such lien or confiscation
arising after the related Closing Date would not give rise to the Company's
repurchase obligation under the related Trust Agreement.
Repossession
In the event of default by an Obligor, the holder of the related retail
installment sale contract has all the remedies of a secured party under the UCC,
except where specifically limited by other state laws. The UCC remedies of a
secured party include the right to repossession by self-help means, unless such
means would constitute a breach of the peace. Unless a vehicle is voluntarily
surrendered, self-help repossession is accomplished simply by taking possession
of the related financed vehicle. In cases where the Obligor objects or raises a
defense to repossession, or if otherwise required by applicable state law, a
court order is obtained from the appropriate state court, and the vehicle must
then be recovered in accordance with that order. In some jurisdictions, the
secured party is required to notify the debtor of the default and the intent to
repossess the collateral and give the debtor a time period within which to cure
the default prior to repossession. Generally, this right of cure may only be
exercised on a limited number of occasions during the term of the related
contract. Other jurisdictions permit repossession without prior notice if it can
be accomplished without a breach of the peace (although in some states, a course
of conduct in which the creditor has accepted late payments has been held to
create a right by the Obligor to receive prior notice).
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Notice of Sale; Redemption Rights
The UCC and other state laws require a secured party to provide the
Obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. In
addition, some states also impose substantive timing requirements on the sale of
repossessed vehicles in certain circumstances and/or various substantive timing
and content requirements on such notices. In some states, under certain
circumstances after a financed vehicle has been repossessed, the Obligor may
redeem the collateral by paying the delinquent installments and other amounts
due. The Obligor has the right to redeem the collateral prior to actual sale or
entry by the secured party into a contract for sale of the collateral by paying
the secured party the unpaid principal balance of the obligation, accrued
interest thereon, reasonable expenses for repossessing, holding, and preparing
the collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees and legal expenses or in some other
states, by payment of delinquent installments on the unpaid principal balance of
the related obligation.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the Vehicles generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
indebtedness. In many instances, the remaining principal amount of such
indebtedness will exceed such proceeds. Under the UCC and laws applicable in
some states, a creditor is entitled to bring an action to obtain a deficiency
judgment from a debtor for any deficiency on repossession and resale of a motor
vehicle securing such debtor's loan; however, in some states, a creditor may not
seek a deficiency judgment from a debtor whose financed vehicle had an initial
cash sales price less than a specified amount, usually $3,000. Some states,
impose prohibitions or limitations or notice requirements on actions for
deficiency judgments. In addition to the notice requirement described above, the
UCC requires that every aspect of the sale or other disposition, including the
method, manner, time, place and terms, be "commercially reasonable". Generally,
courts have held that when a sale is not "commercially reasonable", the secured
party loses its right to a deficiency judgment. In addition, the UCC permits the
debtor or other interested party to recover for any loss caused by noncompliance
with the provisions of the UCC. Also, prior to a sale, the UCC permits the
debtor or other interested person to obtain an order mandating that the secured
party refrain from disposing of the collateral if it is established that the
secured party is not proceeding in accordance with the "default" provisions
under the UCC. However, the deficiency judgment would be a personal judgment
against the Obligor for the shortfall, and a defaulting Obligor can be expected
to have very little capital or sources of income available following
repossession. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount or be uncollectible.
Occasionally, after resale of a vehicle and payment of all expenses and
indebtedness, there is a surplus of funds. In that case, the UCC requires the
creditor to remit the surplus to any holder of a subordinate lien with respect
to the vehicle or if no such lienholder exists or if there are remaining funds,
the UCC requires the creditor to remit the surplus to the Obligor under the
contract.
Consumer Protection Laws
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon creditors and servicers
involved in consumer finance. These laws include the Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss
Warranty Act, the Federal Reserve Board's Regulations B and Z, state adaptations
of the Uniform Consumer Credit Code, state motor vehicle retail installment sale
acts, state "lemon" laws and other similar laws. In addition, the laws of
certain states impose finance charge ceilings and other restrictions on consumer
transactions and require contract disclosures in addition to those required
under federal law. These requirements impose specific statutory liabilities upon
creditors who fail to comply with their provisions. In some cases, this
liability could affect the ability of an assignee such as the Trustee to enforce
consumer finance contracts such as the Receivables.
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The so-called "Holder-in-Due-Course Rule" of the Federal Trade Commission
(the "FTC Rule") has the effect of subjecting any assignee of the seller in a
consumer credit transaction (and certain related creditors and their assignees)
to all claims and defenses which the Obligor in the transaction could assert
against the seller. Liability under the FTC Rule is limited to the amounts paid
by the Obligor under the contract, and the holder of the contract may also be
unable to collect any balance remaining due thereunder from the Obligor. The FTC
Rule is generally duplicated by the Uniform Consumer Credit Code, other state
statutes or the common law in certain states. To the extent that the Receivables
will be subject to the requirements of the FTC Rule, the Trustee, as holder of
the Receivables, will be subject to any claims or defenses that the purchaser of
the related Vehicle may assert against the seller of such Vehicle. Such claims
will be limited to a maximum liability equal to the amounts paid by the Obligor
under the related Receivable.
Under most state vehicle dealer licensing laws, sellers of automobiles and
light duty trucks are required to be licensed to sell vehicles at retail sale.
In addition, with respect to used vehicles, the Federal Trade Commission's Rule
on Sale of Used Vehicles requires that all sellers of used vehicles prepare,
complete and display a "Buyer's Guide" which explains the warranty coverage for
such vehicles. Furthermore, Federal Odometer Regulations promulgated under the
Motor Vehicle Information and Cost Savings Act and the motor vehicle title laws
of most states require that all sellers of used vehicles furnish a written
statement signed by the seller certifying the accuracy of the odometer reading.
If a seller is not properly licensed or if either a Buyer's Guide or Odometer
Disclosure Statement was not provided to the purchaser of a Vehicle, the Obligor
may be able to assert a defense against the seller of the Vehicle. If an Obligor
on a Receivable were successful in asserting any such claim or defense, the
Servicer would pursue on behalf of the Trust any reasonable remedies against the
seller or manufacturer of the vehicle, subject to certain limitations as to the
expense of any such action to be specified in the related Trust Agreement.
Any such loss, to the extent not covered by credit support (as specified
in the Related Prospectus Supplement), could result in losses to the
Securityholders. As specified in the related Prospectus Supplement, if an
Obligor were successful in asserting any such claim or defense as described in
this paragraph or the two immediately preceding paragraphs, such claim or
defense may constitute a breach of a representation and warranty under the
related Trust Agreement and may create an obligation of the Company to
repurchase such Receivable unless the breach were cured.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections of the 14th Amendment to the Constitution of the United States.
Courts have generally either upheld the notice provisions of the UCC and related
laws as reasonable or have found that the creditor's repossession and resale do
not involve sufficient state action to afford constitutional protection to
consumers.
As specified in the related Prospectus Supplement, the Company (or its
Finance Subsidiary, if any) will represent and warrant under the related Trust
Agreement that each Receivable complies with all requirements of law in all
material respects. Accordingly, if an Obligor has a claim against the Trustee
for violation of any law and such claim materially and adversely affects the
Trustee's interest in a Receivable, such violation would constitute a breach of
representation and warranty under the related Trust Agreement and would create
an obligation of the Company (or its Finance Subsidiary, if any) to repurchase
such Receivable unless the breach were cured.
Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), an Obligor who enters military service after the
origination of such Obligor's Receivable (including an Obligor who was in
reserve status and is called to active duty after origination of the
Receivable), may
42
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not be charged interest (including fees and charges) above an annual rate of 6%
during the period of such Obligor's active duty status, unless a court orders
otherwise upon application of the lender. The Relief Act applies to Obligors who
are members of the Army, Navy, Air Force, Marines, National Guard, Reserves,
Coast Guard, and officers of the U.S. Public Health Service assigned to duty
with the military. Because the Relief Act applies to Obligors who enter military
service (including reservists who are called to active duty) after origination
of the related Receivable, no information can be provided as to the number of
loans that may be effected by the Relief Act. Application of the Relief Act
would adversely affect, for an indeterminate period of time, the ability of the
Servicer to collect full amounts of interest on certain of the Receivables. Any
shortfall in interest collections resulting from the application of the Relief
Act or similar legislation or regulations, which would not be recoverable from
the related Receivables, would result in a reduction of the amounts
distributable to the holders of the related Securities, and would not be covered
by advances, any form of Credit Enhancement provided in connection with the
related series of Securities. In addition, the Relief Act imposes limitations
that would impair the ability of the Servicer to foreclose on an affected
Receivable during the Mortgagor's period of active duty status, and, under
certain circumstances, during an additional three month period thereafter. Thus,
in the event that the Relief Act or similar legislation or regulations applies
to any Receivable which goes into default, there may be delays in payment and
losses on the related Securities in connection therewith. Any other interest
shortfalls, deferrals or forgiveness of payments on the Receivables resulting
from similar legislation or regulations may result in delays in payments or
losses to Securityholders of the related series.
Other Limitations
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a creditor to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a motor vehicle, and, as part of the rehabilitation
plan, reduce the amount of the secured indebtedness to the market value of the
motor vehicle at the time of bankruptcy (as determined by the court), leaving
the party providing financing as a general unsecured creditor for the remainder
of the indebtedness. A bankruptcy court may also reduce the monthly payments due
under a contract or change the rate of interest and time of repayment of the
indebtedness. Any such shortfall, to the extent not covered by credit support
(as specified in each Prospectus Supplement), could result in losses to the
Securityholders.
CERTAIN TAX CONSIDERATIONS
The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations stated therein, federal income tax considerations
relevant to the purchase, ownership and disposition of such Securities.
ERISA CONSIDERATIONS
The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations discussed therein, considerations under ERISA
relevant to the purchase of such Securities by employee benefit plans and
individual retirement accounts.
METHODS OF DISTRIBUTION
The Securities offered hereby and by the related Prospectus Supplement
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the public offering or
purchase price of such series and the net proceeds to the Company from such
sale.
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The Company intends that Securities will be offered through the following
methods from time to time and that offerings may be made concurrently through
more than one of these methods or that an offering of a particular series of
Securities may be made through a combination of two or more of these methods.
Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and
public re-offering by underwriters;
2. By placements by the Company with institutional investors through
dealers;
3. By direct placements by the Company with institutional investors;
and
4. By competitive bid.
In addition, if specified in the related Prospectus Supplement, a series
of Securities may be offered in whole or in part in exchange for the Receivables
(and other assets, if applicable) that would comprise the Trust Property in
respect of such Securities.
If underwriters are used in a sale of any Securities (other than in
connection with an underwriting on a best efforts basis), such Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. The Securities will be set forth
on the cover of the Prospectus Supplement relating to such series and the
members of the underwriting syndicate, if any, will be named in such Prospectus
Supplement.
In connection with the sale of the Securities, underwriters may receive
compensation from the Company or from purchasers of the Securities in the form
of discounts, concessions or commissions. Underwriters and dealers participating
in the distribution of the Securities may be deemed to be underwriters in
connection with such Securities, and any discounts or commissions received by
them from the Company and any profit on the resale of Securities by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Prospectus Supplement will describe any such compensation paid by the
Company.
It is anticipated that the underwriting agreement pertaining to the sale
of any series of Securities will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Securities if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Company will indemnify the
several underwriters and the underwriters will indemnify the Company against
certain civil liabilities, including liabilities under the Securities Act or
will contribute to payments required to be made in respect thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Company and purchasers of
Securities of such series.
Purchasers of Securities, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the Securities Act in connection with reoffers and sales by them of
Securities. Holders of Securities should consult with their legal advisors in
this regard prior to any such reoffer or sale.
LEGAL OPINIONS
Certain legal matters relating to the issuance of the Securities of any
series, including certain federal and state income tax consequences with respect
thereto, will be passed upon by Dewey Ballantine, New York, New York, or other
counsel specified in the related Prospectus Supplement.
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FINANCIAL INFORMATION
Certain specified Trust Property will secure each series of Securities, no
Trust will engage in any business activities or have any assets or obligations
prior to the issuance of the related series of Securities, except for serial
issuances by a Master Trust. Accordingly, no financial statements with respect
to any Trust Property will be included in this Prospectus or in the related
Prospectus Supplement.
A Prospectus Supplement may contain the financial statements of the
related Credit Enhancer, if any.
ADDITIONAL INFORMATION
This Prospectus, together with the Prospectus Supplement for each series
of Securities, contains a summary of the material terms of the applicable
exhibits to the Registration Statement and the documents referred to herein and
therein. Copies of such exhibits are on file at the offices of the Securities
and Exchange Commission in Washington, D.C., and may be obtained at rates
prescribed by the Commission upon request to the Commission and may be
inspected, without charge, at the Commission's offices.
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INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus and
the pages on which the definitions of such terms may be found herein.
Accrual Securities...........................................................6
Additional Receivables......................................................10
AFS .........................................................................4
APR .....................................................................9, 19
Cede .......................................................................10
CEDEL Participants..........................................................28
Certificateholders..........................................................34
Certificates..............................................................1, 4
Class .......................................................................1
Closing Date............................................................31, 32
Collection Account..........................................................32
Collectors .................................................................22
Commission .................................................................2
Commodity Indexed Securities................................................26
Company .....................................................................4
Contracts ............................................................1, 4, 20
Cooperative ................................................................29
Credit Enhancement..........................................................16
Credit Enhancer.............................................................16
Currency Indexed Securties..................................................26
Dealers .....................................................................4
Debt Securities.............................................................12
Definitive Securities.......................................................29
Depositaries................................................................27
Direct Participants.........................................................16
Distribution Account........................................................32
DTC ........................................................................10
Eligible Deposit Account....................................................33
Eligible Institution........................................................33
Eligible Investments........................................................32
ERISA ......................................................................12
Euroclear Operator..........................................................29
Euroclear Participants......................................................29
Event of Default............................................................30
Exchange Act.............................................................2, 12
Face Amount ................................................................27
Finance Subsidiary..........................................................14
Fixed Income Securities......................................................6
Fixed Value Contracts....................................................9, 19
Forward Purchase Agreement..................................................31
FTC Rule ...................................................................42
Funding Period..............................................................31
Grantor Trust Securities....................................................12
Holder-in-Due-Course Rule...................................................42
Indenture ...................................................................5
Indenture Trustee............................................................5
Index ......................................................................26
Indexed Commodity...........................................................26
Indexed Currency............................................................26
Indexed Principal Amount....................................................26
Indexed Securities..........................................................26
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Indirect Participants...................................................16, 27
Insolvency Event............................................................36
Insolvency Laws.............................................................14
Interest Rate.............................................................2, 6
Investment Company Act.......................................................7
Investment Earnings.........................................................32
Issuer ...............................................................1, 4, 18
Master Trust.................................................................8
Master Trust Agreement.......................................................8
Master Trust New Issuance...................................................25
Noteholders ................................................................34
Notes ....................................................................1, 4
Participants................................................................27
Partnership Interests.......................................................12
Pass-Through Rate............................................................2
Payment Date.................................................................6
Policy ...................................................................1, 5
Pool Balance................................................................23
Pool Factor ................................................................23
Pooling Agreement............................................................5
Pre-Funding Account.........................................................10
Pre-Funding Period..........................................................10
Prepayment .................................................................16
Prospectus Supplement........................................................1
Rating Agencies.............................................................12
Ratings Effect..........................................................16, 26
Receivables ...........................................................1, 4, 5
Record Date .................................................................7
Registration Statement.......................................................2
Relief Act ............................................................17, 42
Remittance Period............................................................7
Residual Interest............................................................7
Rule of 78s .............................................................9, 19
Rule of 78s Contracts.......................................................19
Rules ......................................................................28
Securities ..................................................................1
Securities Act...............................................................2
Security Insurer............................................................10
Securityholder..............................................................28
Securityholders..............................................................6
Senior Securities............................................................6
Servicer .................................................................1, 4
Servicer Default............................................................36
Servicing Agreement..........................................................5
Servicing Fee...............................................................34
Servicing Fee Rate..........................................................34
Simple Interest Contracts................................................9, 19
Stock Index ................................................................27
Stock Indexed Securities....................................................27
Strip Securities.............................................................6
Subordinate Securities.......................................................6
Terms and Conditions........................................................29
Transferor .................................................................4
Trust ...................................................................1, 4
Trust Accounts..............................................................32
Trust Agreement..........................................................5, 31
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Trust Property............................................................1, 4
Trustee .....................................................................5
Vehicles .................................................................1, 4
Vendors .....................................................................4
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the amount of fees and expenses
(other than underwriting discounts and commissions) to be incurred in connection
with the issuance and distribution of the Offered Certificates.
SEC Filing Fee.............................................. $ 303,030
Trustee's Fees and Expenses*................................ 20,000
Legal Fees and Expenses*.................................... 300,000
Accounting Fees and Expenses*............................... 80,000
Printing and Engraving Expenses*............................ 100,000
Blue Sky Qualification and Legal
Investment Fees and Expenses*............................. 10,000
Rating Agency Fees*......................................... 200,000
Certificate Insurer's Fee*.................................. 150,000
Miscellaneous*.............................................. 200,000
----------
TOTAL ................................................ $1,363,030
==========
- ----------
* Estimated in accordance with Item 511 of Regulation S-K.
Item 15. Indemnification of Directors and Officers.
Indemnification. Under the laws which govern the organization
of the registrant, the registrant has the power and in some instances may be
required to provide an agent, including an officer or director, who was or is a
party or is threatened to be made a party to certain proceedings, with
indemnification against certain expenses, judgments, fines, settlements and
other amounts under certain circumstances.
Section 9 of the Certificate of Incorporation of AmeriCredit
Financial Services, Inc. provides that all officers and directors of the
corporation shall be indemnified by the corporation from and against all
expenses, liabilities or other matters arising out of their status as an officer
or director for their acts, omissions or services rendered in such capacities.
The forms of the Underwriting Agreement, filed as Exhibits 1.1
and 1.2 to this Registration Statement, provide that AmeriCredit Financial
Services, Inc. will indemnify and reimburse the underwriter(s) and each
controlling person of the underwriter(s) with respect to certain expenses and
liabilities, including liabilities under the 1933 Act or other federal or state
regulations or under the common law, which arise out of or are based on certain
material misstatements or omissions in the Registration Statement. In addition,
the Underwriting Agreements provide that the underwriter(s) will similarly
indemnify and reimburse AmeriCredit Financial Services, Inc. with respect to
certain material misstatements or omissions in the Registration Statement which
are based on certain written information furnished by the underwriter(s) for use
in connection with the preparation of the Registration Statement.
Insurance. As permitted under the laws which govern the
organization of the registrant, the registrant's Certificate of Incorporation
permits the board of directors to purchase and maintain insurance on behalf of
the registrant's agents, including its officers and directors, against any
liability asserted against them in such capacity or arising out of such agents'
status as such, whether or not such registrant would have the power to indemnify
them against such liability under applicable law.
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Item 16. Exhibits.
1.1 -- Form of Underwriting Agreement - Notes (incorporated by
reference to Exhibit 1.1 to the Registrant's Registration
Statement on Form S-3 (Reg. No. 33-98620).
1.2 -- Form of Underwriting Agreement - Certificates (incorporated by
reference to Exhibit 1.2 to the Registrant's Registration
Statement on Form S-3 (Reg. No. 33-98620).
3.1 -- Certificate of Incorporation of the Sponsor (incorporated by
reference to Exhibit 3.1 to the Registrant's Registration
Statement on Form S-3 (Reg. No. 33-98620).
3.2 -- By-Laws of the Sponsor (incorporated by reference to Exhibit
3.2 to the Registrant's Registration Statement on Form S-3
(Reg. No. 33-98620).
4.1 -- Form of Indenture between the Trust and the Indenture Trustee
(incorporated by reference to Exhibit 4.1 to the Registrant's
Registration Statement on Form S-3 (Reg. No. 33-98620).
4.2 -- Form of Indenture between the Sponsor and the Indenture Trustee
(incorporated by reference to Exhibit 4.2 to the Registrant's
Registration Statement on Form S-3 (Reg. No. 33-98620).
4.3 -- Form of Pooling and Servicing Agreement (incorporated by
reference to Exhibit 4.3 to the Registrant's Registration
Statement on Form S-3 (Reg. No. 33-98620).
4.4 -- Form of Trust Agreement (incorporated by reference to Exhibit
4.4 to the Registrant's Registration Statement on Form S-3
(Reg. No. 33-98620).
5.1 -- Opinion of Dewey Ballantine with respect to validity.*
8.1 -- Opinion of Dewey Ballantine with respect to tax matters.*
10.1 -- Form of Receivables Acquisition Agreement (incorporated by
reference to Exhibit 10.1 to the Registrant's Registration
Statement on Form S-3 (Reg. No. 33-98620).
23.1 -- Consents of Dewey Ballantine are included in its opinions filed
as Exhibits 5.1 and 8.1 hereto.
99.1 -- Form of Prospectus Supplement - Certificates and Notes
(incorporated by reference to Exhibit 99.1 to the Registrant's
Registration Statement on Form S-3 (Reg. No. 33-98620).
99.2 -- Form of Prospectus Supplement - Notes (incorporated by
reference to Exhibit 99.2 to the Registrant's Registration
Statement on Form S-3 (Reg. No. 33-98620).
99.3 -- Form of Prospectus Supplement - Certificates (incorporated by
reference to Exhibit 99.3 to the Registrant's Registration
Statement on Form S-3 (Reg. No. 33-98620).
99.4 -- Form of Prospectus Supplement - Master Trust (incorporated by
reference to Exhibit 99.4 to the Registrant's Registration
Statement on Form S-3 (Reg. No. 33-98620).
* Filed herewith.
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Item 17. Undertakings.
A. Undertaking in respect of indemnification
Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described above in Item 15, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by them is against public policy as expressed in the 1933
Act and will be governed by the final adjudication of such issue.
B. Undertaking pursuant to Rule 415.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the Registration Statement
or any material change of such information in the Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply if the information
required to be included in the post-effective amendment is contained in periodic
reports filed by the Issuer pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
C. Undertaking pursuant to Rule 430A.
The Registrant hereby undertakes:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of a registration statement in Reliance upon Rule 430A and
contained in the form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Worth, State of Texas on the 16th day of
December, 1996.
Americredit Financial Services, Inc.
By /s/ Michael R. Barrington
-----------------------------------
Michael R. Barrington
Director and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Michael R. Barrington Director and Chief Executive December 16, 1996
- ------------------------- Officer (Principal Executive
Michael R. Barrington Officer)
/s/ Daniel E. Berce Director, Executive Vice December 16, 1996
- ------------------------- President, Chief Financial
Daniel E. Berce Officer and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
/s/ Edward H. Esstman Director, President and Chief December 16, 1996
- ------------------------- Operating Officer
Edward H. Esstman
/s/ Clifton H. Morris, Jr. Director and Chairman of the December 16, 1996
- ------------------------- Board
Clifton H. Morris, Jr.
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EXHIBIT INDEX
Exhibit
- -------
1.1 - Form of Underwriting Agreement -- Notes (incorporated by reference
to Exhibit 1.1 to the Registrant's Registration Statement on Form S-3
(Reg. No. 33-98620).
1.2 - Form of Underwriting Agreement -- Certificates (incorporated by
reference to Exhibit 1.2 to the Registrant's Registration Statement on
Form S-3 (Reg. No. 33-98620).
3.1 - Articles of Incorporation of the Sponsor (incorporated by reference to
Exhibit 3.1 to the Registrant's Registration Statement on Form S-3
(Reg. No. 33-98620).
3.2 - Bylaws of the Sponsor (incorporated by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form S-3 (Reg. No. 33-98620).
4.1 - Form of Indenture between the Trust and the
Indenture Trustee (incorporated by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-3 (Reg. No. 33-98620).
4.2 - Form of Indenture between the Sponsor and the
Indenture Trustee (incorporated by reference to Exhibit 4.2 to the
Registrant's Registration Statement on Form S-3 (Reg. No. 33-98620).
4.3 - Form of Pooling and Servicing Agreement (incorporated by reference
to Exhibit 4.3 to the Registrant's Registration Statement on Form S-3
(Reg. No. 33-98620).
4.4 - Form of Trust Agreement (incorporated by reference to Exhibit 4.4 to
the Registrant's Registration Statement on Form S-3 (Reg. No. 33-
98620).
5.1 - Opinion of Dewey Ballantine with respect to legality.*
8.1 - Opinion of Dewey Ballantine with respect to tax matters.*
10.1 - Form of Receivables Acquisition Agreement (incorporated by reference
to Exhibit 10.1 to the Registrant's Registration Statement on Form S-3
(Reg. No. 33-98620).
23.1 - Consent of Dewey Ballantine (included in Exhibits 5.1 and 8.1).
99.1 - Form of Prospectus Supplement-- Certificates and Notes (incorporated
by reference to Exhibit 99.1 to the Registrant's Registration Statement
on Form S-3 (Reg. No. 33-98620).
99.2 - Form of Prospectus Supplement-- Notes (incorporated by reference to
Exhibit 99.2 to the Registrant's Registration Statement on Form S-3
(Reg. No. 33-98620).
99.3 - Form of Prospectus Supplement-- Certificates (incorporated by
reference to Exhibit 99.3 to the Registrant's Registration Statement on
Form S-3 (Reg. No. 33-98620).
99.4 - Form of Prospectus Supplement-- Master Trust (incorporated by
reference to Exhibit 99.4 to the Registrant's Registration Statement on
Form S-3 (Reg. No. 33-98620).
* Filed herewith.
EXHIBIT 5.1
<PAGE>
_____________ __, 199__
AmeriCredit Financial Services, Inc.
200 Bailey Avenue
Fort Worth, Texas 76107-1220
Re: AmeriCredit Financial Services, Inc.
Automobile Receivables-Backed Securities
Series 199__-
-----------------------------------------
Gentlemen:
We have acted as counsel to AmeriCredit Financial Services, Inc.
(the "Registrant") in connection with the preparation and filing of the
registration statement on Form S-3 (such registration statement, the
"Registration Statement") being filed today with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), in
respect of Automobile Receivables-Backed Securities, Series 199__-
("Securities") which the Registrant plans to offer in series, each series to be
issued under a separate [pooling and servicing agreement] [trust agreement] (a
"[Pooling and Servicing Agreement]" ["Trust Agreement"]), in substantially one
of the forms incorporated by reference as Exhibits to the Registration
Statement, among AmeriCredit Financial Services, Inc. (the "Company"),
AmeriCredit Receivables Finance Corp., as issuer, AmeriCredit Receivables Corp.,
as seller, __________________, as back-up servicer, and a trustee to be
identified in the prospectus supplement for such series of Securities (the
"Trustee" for such series).
We have examined and relied on the originals or copies certified or
otherwise identified to our satisfaction of all such documents and records of
the Company and such other instruments and other certificates of public
officials, officers and representatives of the Company and such other persons,
and we have made such investigations of law, as we have deemed appropriate as a
basis for the opinions expressed below.
The opinions expressed below are subject to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and to general equity principles.
<PAGE>
AmeriCredit Financial Services, Inc.
______________ __, 199__
Page 2
We are admitted to the Bar of the State of New York and we express
no opinion as to the laws of any other jurisdiction except as to matters that
are governed by Federal law or the laws of the State of New York. All opinions
expressed herein are based on laws, regulations and policy guidelines currently
in force and may be affected by future regulations.
Based upon the foregoing, we are of the opinion that:
1. When, in respect of a series of Securities, a [Pooling and
Servicing Agreement] [Trust Agreement] has been duly authorized by all
necessary action and duly executed and delivered by the Company, the
issuer, the seller, the back-up servicer and the Trustee for such series,
such Pooling and Servicing Agreement will be a valid and legally binding
obligation of the Company; and
2. When a [Pooling and Servicing Agreement] [Trust Agreement] for a
series of Securities has been duly authorized by all necessary action and
duly executed and delivered by the Company, the issuer, the seller, the
back-up servicer and the Trustee for such series, and when the Securities
of such series have been duly executed and authenticated in accordance
with the provisions of the [Pooling and Servicing Agreement] [Trust
Agreement], and issued and sold as contemplated in the Registration
Statement and the prospectus, as amended or supplemented and delivered
pursuant to Section 5 of the Act in connection therewith, such Securities
will be legally and validly issued, fully paid and nonassessable, and the
holders of such Securities will be entitled to the benefits of such
[Pooling and Servicing Agreement] [Trust Agreement].
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to Dewey Ballantine in the
Registration Statement and the related prospectus under the heading "Legal
Matters."
This opinion is furnished by us as counsel to the Registrant and is
solely for the benefit of the addressees hereof. It may not be relied upon by
any other person or for any other purpose without our prior written consent.
Very truly yours,
EXHIBIT 8.1
<PAGE>
_____________ __, 199__
AmeriCredit Financial Services, Inc.
200 Bailey Avenue
Fort Worth, Texas 76107-1220
Re: AmeriCredit Financial Services, Inc.
Automobile Receivables-Backed Securities
Series 199 -
----------------------------------------
Gentlemen:
We have acted as counsel to AmeriCredit Financial Services, Inc. in
connection with the preparation and filing of a registration statement on Form
S-3 (the "Registration Statement") being filed today with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Act"), in respect of Automobile Receivables-Backed Securities, Series 199__-
("Securities") which the Registrant plans to offer in series.
The opinion contained in the relevant prospectus supplement
constitutes a part of the Registration Statement under the heading "Certain
Federal Income Tax Consequences", to the extent they constitute legal
conclusions with respect to matters federal law, have been prepared by us and,
in our opinion, provide a fair and accurate summary of such law or conclusions.
We hereby consent to the filing of this letter as an Exhibit to the
Registration Statement and to the reference to Dewey Ballantine in the
Registration Statement and related prospectus under the heading "Certain Federal
Income Tax Consequences."
Very truly yours,
